Vietnamese flat steel demand to strengthen in 2018
----Interview with Zheng Shixin
Deputy General Manager
IPC Company
- Located in Ho Chimin City, Vietnam, IPC Company is a group enterprise that mainly deals with steel trading, steel structure processing, spot welding steel wire mesh making and steel sheet pile leasing. The company focuses on Vietnam's iron and steel industry, and it has been working for 18 years to contribute to the construction of Vietnam.
- Asian Metal: Good afternoon, Mr. Zheng. Thanks a lot for agreeing to the interview. Please could you briefly tell us about your company?
- Zheng: It’s my pleasure. IPC Company stays among the top 500 Vietnamese companies. We mainly deal with steel trading, steel structure processing and so on. We have earned a favorable reputation in the steel industry by adhering to the “Consumer first, reputation first” business philosophy. We have built long-term cooperation with several state-owned and famous enterprises.
- Asian Metal: Where are your materials sold? How about customers?
- Zheng: At present, the Vietnamese market is the main part, and the surrounding region of Southeast Asia is supplemented. Most of the customers are end users from famous projects.
- Asian Metal: Steel plate export prices from Chinese mills soared by over USD30/t to USD610-615/t FOB China after the Chinese New Year holiday, and traders in Vietnam were boosted to raise prices by around 13%. So, how about the market performance after the sudden price increase? Do you think the price could go up further in the foreseeable future?
- Zheng: Just like China, Vietnamese people also have the tradition of the Spring Festival. The market performed slowly in the first half of February with more and more participants retreating from the market for the holiday.
- The overall low inventory and the sudden price soar from China are the two main reasons for the price increase of Vietnam. It's well known that steel prices almost doubled in China in 2016, far exceeded expectations of Vietnamese market participants. Therefore, most importers had been cautious about supplementing inventories since early 2017, and they were inactive in replenishing inventories before the Spring Festival, leading to a historical low stockpile. The sudden price soar from China stimulated them to raise prices actively.
- The market performance showed signs of warming up after the price increase, though it was far from satisfactory. Personally, I think the price trend in Vietnam is highly depended on local stockpile level as well as market situation in China.
- Asian Metal: President Donald Trump said on March 1 that the United States is set to impose 25 percent of tariff on steel imports. Do you think it will influence steel plate prices from China and Vietnam?
- Zheng: Generally speaking, the heavy tax from the U.S. will surely restrain exports from other countries. However, the direct influence on steel plate from China and Vietnam is faint. It's well known that more than 60% of Vietnamese's steel plate are imported from China, and are used by end users directly, rather than exported again after further process. It will reduce the export of cold rolling base material from China to some extent.
- Asian Metal: How about the demand for flat steel in Vietnam this year? Will it be stronger over that in 2017?
- Zheng: Yes, the demand for flat steel will get strong obviously this year. The launch and expansion of the VINFAST automobile production base project in the coastal city of Haiphong and the Hoaphat located in the Quang Ngai province, and some airport terminals will use lots of flat steel especially steel plate.
- Asian Metal: As far as I learnt, most importers in Vietnam adopted cautiously optimistic attitudes towards the market outlook and were inactive in supplementing inventories seeing the unreasonably high prices from China, leading to an overall low stockpile. Do you plan to increase the stock this year?
- Zheng: Yes, we are also cautious about replenishing stocks seeing frequent prices fluctuations as well as the unpromising market prospect, and we will not enlarge stockpiles obviously until the market trend is clear.
- Asian Metal: What’s your biggest challenge at present? What about your advantages?
- Zheng: The biggest challenge in the short term is the uncertainty of the market, and it is necessary to make a reasonable profit for the more accurate prejudge of the future market.
- Our strength is mainly in the environment of the whole market. At present, Vietnam relies much on imports. The arrival time difference of each order enables us to prepare fully for the market fluctuation. This is an advantage and also disadvantage. The main factor is to see the safe stock each time. For example, how much we have sold in advance.
- Asian Metal: Thanks so much for your time. Wish you and your company a great success in the future.
- Zheng: It’s my pleasure.
