Thanh Nien Daily reported that steel producers in Vietnam expect construction steel capacity to reach about 7 million tonnes in 2009, outpacing demand estimated at 4 million tonnes.
Mr Pham Chi Cuong chairman of Vietnam Steel Association said that "The sector is likely to face an oversupply of steel as projects, mainly foreign invested ones, have boomed in the country in recent years."
According to the Vietnam steel sector’s 2007-2015 development plan with a vision to 2025, as of early last year, three steel plant projects with huge output capacities, totaling about 32.42 million tonnes per year, had been approved.
However, Vietnam’s steel demand is estimated at only 10 to 11 million tonnes in 2010 and some 20 million tonnes in 2020.
Mr Cuong said that most of investors come from South Korea, Japan, and Taiwan, which are big steel producers and exporters, thus they should be able to find export markets for their products.
He also warned of the possibility that firms may use interest rate subsidized loans to import low priced steel that may threaten local products in the domestic market. He added that "We have warned about the risk, and proposed that the Ministry of Finance monitors the issue more closely."
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