Although steel manufacturers saw good results in production and business last year, the steel sector would still face many difficulties in 2010, deputy minister of Trade and Industry, Do Huu Hao said at the steel sector‘s conference on Monday.

In 2009, despite the global economic crisis and difficulties due to low-priced imported steel and rising production costs, the steel industry is one of the industrial sectors that achieved high growth with an output increase of 25 per cent and consumption up 30 per cent over the previous year.

Most members of the Viet Nam Steel Association (VSA) achieved high growth compared with 2008, including the Viet Nam Steel Corporation (VNSteel) which managed an increase of 14 per cent to VND11.66 trillion (US$648 million) in industrial production value and steel output of more than 2,382 million tonnes.

However, this year, the steel sector still faces many difficulties, of which the price hike of materials for steel production such as coal, electricity, oil and iron ore is a big one. Cheap imported steel is also still a large obstacle standing in the way of sustainable development of the steel sector. As a result, the price of steel is forecast to increase in 2010.

On top of this, the competitive pressure from imorted steel has increased, especally from China and South Korea, because of tax reductions in line with WTO commitments, and the Government has ceased the stimulus packages and increased basic interest rates.

Additionally, there would be harsh competition in domestic construction steel markets in 2010 due to a surplus, predicted Pham Chi Cuong, chairman of the association.

To overcome these difficulties, the VSA has asked relevant agencies to protect the domestic market by stopping illegal steel import.

The association has also asked agencies to enforce customs regulations to avoid the import of large volumes of steel, especially products that are in a surplus and prevent trade fraud.

Meanwhile, VNSteel general director Dau Van Hung said that the sector needed the Government’s support in stimulating the domestic market, maintaining stable forex rates and offering sufficient foreign currency for the import of raw materials for production purposes.

For the corporation, it will continue the implementation of key, strategic development projects and focus on research and analysis, strengthening trade promotion, trademark development and the search for new export markets.

However, according to the association, the country’s economy will be strong this year and the steel sector will see high growth.

VNSteel is optimistic and targets an increase of 9.7 per cent to VND12.4 trillion ($689 million) in production value in 2010. — VNS