Steel, cement businesses experience hardships due to Covid-19

Industries formerly forecast to be less affected by the Covid-19 outbreak such as steel and cement have started suffering sharp fall in business performance and even loss.
A cement production plant in Nha Be District, HCMC (Photo: SGGP)
A cement production plant in Nha Be District, HCMC (Photo: SGGP)

Lately Vietnam Steel Association reported on the impact of Covid-19 pandemic on domestic steel industry. Accordingly businesses in the field have seen sharp fall in business efficiency and even loss.

In the first two months of 2020, steel production reached over 3.6 million tons, down 5.3 percent with sales dropping 17.8 percent year on year. Export was also gloomy in the first two months with 602,723 tons, dropping 31 percent over the same period last year.

Because of weak demand, structural steel price has educed meanwhile the price of some materials for making the product has been in an upward trend because of supply constraints from China.

Notably, the inventory of steel products has been increasing while businesses have to pay loan interest and storage and warehousing costs.

Representative of the Vietnam Steel Association (VSA) said that the pandemic has congested the market. Many construction works and projects using cement have halted construction.

Some steel plants having workers from pandemic hit areas must halt or reduce production because of unstable labor force and interrupted material supply majorly imported from China.

Implementing the Government’s direction, member businesses of VSA have implemented solutions to ensure employment and income for workers as well as find alternative material sources and adjust production and trading plan.

The association proposed the Government to soon give supports in financial and credit policies, reduce interest rate and extend debt payment deadline. In addition, they suggested the Government to have solutions in customs clearance for imported goods to meet production demand of businesses but still abide by regulations on pandemic prevention and combat.

Although the Prime Minister has issued a directive about solutions to clear difficulties and support Covid-19 affected businesses, none of them have been able to get access to these solutions.

Falling in the same situation, cement firms have seen domestic consumption and export down compared to the same period in 2019. Currently, local consumption accounts for only 60 percent of the level in the same period in 2019 and 48 percent compared to the end of the year. Cement and clinker export strongly falls making up approximately 70 percent and 56 percent compared to the same period in 2019 and the end of 2019 respectively. Total domestic consumption and export accounts for only 51 percent against the end of 2019.

Chairman of Vietnam Cement Association Nguyen Quang Cung said that the main reason for the issue is the long lasting Covid-19 pandemic.

To block the decline momentum and stabilize production, the association proposed the Government, ministries and agencies to promptly have measures to clear difficulties for the cement industry, for instance they should have tax exemption and reduction and loan rate cut policies to assist affected firms.