The Vietnam Steel Association (VSA) says around 400,000 tonnes of steel were consumed in May, just equal to the previous month’s figure, leaving the inventory level at a record high of nearly 350,000 tonnes.
One reason cited by the VSA is that local businesses have yet to adjust production levels in line with market fluctuations.
Other reasons include low domestic consumption, sluggishness in the real estate market and modest public investment.
In addition, there are risks inherent in the possibility of steel product that may reach 1.5 million tonnes this year.
Against all odds, steel businesses are planning to suspend or cut their production down to 50 percent to redress the balance between supply and demand.
The VSA says, more 30 steel producers have already decided to lower selling prices, but it warns consumers to be careful about the quality of steel on the domestic market in the face of businesses against cheap products imported from China.
The VSA has asked its members to help control market prices by reducing stocks and expanding export business.
Domestic steel producers, it says, must meet national quality for the state standards if they want to compete against imported steel successfully.
Last but not least is the urgent need to reduce the value added tax rate from 10 percent to 5 percent, and interest rates on bank loans, as part of the incentive policies.