Hanoi (VNS/VNA) - The Ministry of Industry and Trade (MoIT) has denied rumoursthat it proposed the establishment of a State stabilisation fund to cope withthe sudden increase in steel prices that has impacted many businesses.

DeputyMinister of Industry and Trade Do Thang Hai told a recent press conference thatfrom the end of 2020 until now, the price of raw materials for steel productionhas soared, causing a sudden increase in the price of steel products, affectingconstruction enterprises and their ongoing projects. 

After DeputyPrime Minister Le Minh Khai’s request to report about the situation on May 8,the ministry met with leading steel manufacturing and trading enterprises likethe Vietnam Steel Corporation and Hoa Phat Group, then submitted their reportto the Government.

Hai toldthe conference: “The MoIT does not propose a stabilisation fund for steelprices.”

Earlier,experts and steel manufacturing enterprises came out as opposed to such a fund.

NguyenVan Sua, a steel industry expert, told local media a steel price stabilisationfund was "incompatible with the principle of price management in a marketeconomy" because steel is not a commodity managed by the State. 

Suasaid: “The recent spike in domestic steel prices was mainly due to the highprice of raw materials for this product known as iron ore, fat coal and scrapsteel, which have all skyrocketed in the international market.”

“Rawmaterials account for 90 percent of the steel production price, so when rawmaterials increase, domestic steel prices go up," he added.

Assteel prices increased due to the world price level, a stabilisation fund isnot suitable, said Sua, adding it was necessary to use the law of supply anddemand of the market to cool down the price. 

Economist NgoTri Long, who is an expert in prices, said the steel market has beencompetitive since 2012 and there is no reason to use the tools of theState for this market. Instead, to cool down steel prices, indirect toolssuch as taxes and trade should be used, he said.

Longsaid steel was not listed as a good subject to price stabilisation by law,so a proposal to build such a fund was not suitable.

OnJune 3, Hai said the MoIT and its branches would conduct research, review andimplement the construction of technical barriers and quality standards, createa healthy competitive environment and ensure the interests of consumers, aswell as implement trade remedies for steel products in accordance with traderegulations and international laws.

Atthe same time, the ministry would monitor and consider handling possibledumping of some steel products imported into Vietnam as well as deal withanti-dumping lawsuits of other countries against Vietnamese steelexports. 

Thedeputy minister said market management teams would focus on the steel market toprevent and handle the phenomenon of speculation to increase steel prices,manipulate steel prices in the market, and trade fraud.

TheMoIT also suggested steel manufacturing enterprises reduce input costs,production costs to lower the cost of finished steel products, maximisedomestic capacity to increase supply and limit exports of domestic productsthat are in demand. 

Fromthe beginning of this year, steel prices have jumped by 40 percent,significantly pushing up investment capital, in some cases by billions ofVietnamese dong, for construction projects.

Accordingto the General Statistics Office (GSO), the price index of steel and ironproducts increased by nearly 20 percent in April from the same period last yearand more than 23 percent in the first four months of 2021.

TheGSO pointed out three reasons for the increase, including the rise inprices of raw materials for steel production and transportation costs, thedecrease of global steel supplies as China tightened control over productionvolume and rising domestic demand.

VRSharma, Managing Director of Jindal Steel and Power Ltd (JSPL), one ofIndia’s leading conglomerates with interests in steel, power, mining and infrastructure, told hellenicshippingnews.com on June 4that: “Steel consumption has increased worldwide. America is pulling a lotof demand, so is China and this has led to the overall increase in the rawmaterial prices.”/.