Unfinished steel projects hunt for capital
(VOV) - The steel industry, which is currently struggling to maintain production and settle its excess inventory, is seeking capital for its incomplete projects.
Investors are weighing up plans to pour more investment into steel projects many of which are currently operating beyond their design capacity.
In a recent interview granted to the Vietnam News Agency, Pham Chi Cuong, President of the Vietnam Steel Association, said the steel industry is undertaking a challenging task of mobilising capital for existing projects.
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| Steel supply is now exceeding market demand |
He said most approved projects are slow going due to market price and currency rate fluctuations, policy changes, and global economic slowdown impact.
According to Cuong, the Vietnam Steel Corporation has failed to find its Russian and Malaysian partners for its 2 million tonne hot rolled steel sheet project.
The Indian giant steel producer, Tata, has withdrawn from a US$5 billion steel project in Ha Tinh province – a key project in the locality for 2015-2025.
The second phase of a project to expand the Thai Nguyen iron and steel plant, one of the steel industry’s two biggest projects, has been put on hold for several years due to capital shortages.
The second phase was approved in 2007 with a total investment of more than VND3,800 billion, and was scheduled to be given a test run in 2011. However, problems arising from implementation forced investors to adjust the investment plan, raising the initial cost to VND8,100 billion.
The government agreed in principle a plan to mobilise capital for the project. The Vietnam Steel Corporation made a proposal to the Ministry of Industry and Trade that suggested help from commercial banks.
Commercial banks are reluctant to disburse their funds as the property market has yet to recover, domestic steel consumption is falling sharply and supply is exceeding demand.
Cuong quoted steel makers’ complaint about banks’ conditions for lending capital, saying businesses still find it difficult to access bank loans despite constant interest rate reductions.
The government has introduced a policy to support businesses, and banks need to realise it with specific conditions, enabling businesses to take out loans to maintain production, said Cuong.