Steel firms fail in effort to revive demand
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Despite a slump in demand, steel manufacturers have not cut prices, choosing instead to increase commission for distributors, a move that has not worked.
H.C, who runs a construction steel shop in Ho Chi Minh City’s Ly Thuong Kiet Street, said she has virtually no customers and only managed to sell 1.5 tons last fortnight.
An official from the southern branch of the Vietnam Steel Corporation said sales of construction steel in the last two months was only 50,000-54,000 tons, 60 percent down from normal.
“A lot of the construction has been stopped and people are becoming thrifty, both of which are causing difficulty for the steel business,” he said.
Hoang Quoc Dat, director of the Dai Vinh Construction Corporation, said his firm had no new contracts in the last two months except for some small ones for repair which did not require the use of steel.
Pham Chi Cuong, head of the Vietnam Steel Association, attributed the fall in demand to the reduction in public spending around the country.
However, instead of lowering prices to boost sales, most manufacturers have kept their March prices of VND18.28-18.48 million ($US914-924) a ton.
With this high market price, these firms are even able to grant bigger commission for their distributors without fearing of loss, as the original price is just VND16 million ($800) a ton.
Distributors have a margin of VND500,000-600,000 ($25-30), H.C said, adding manufacturers have hiked commissions by VND200,000-300,000 a ton in the hope of improving sales.
H.C, who runs a construction steel shop in Ho Chi Minh City’s Ly Thuong Kiet Street, said she has virtually no customers and only managed to sell 1.5 tons last fortnight.
An official from the southern branch of the Vietnam Steel Corporation said sales of construction steel in the last two months was only 50,000-54,000 tons, 60 percent down from normal.
“A lot of the construction has been stopped and people are becoming thrifty, both of which are causing difficulty for the steel business,” he said.
Hoang Quoc Dat, director of the Dai Vinh Construction Corporation, said his firm had no new contracts in the last two months except for some small ones for repair which did not require the use of steel.
Pham Chi Cuong, head of the Vietnam Steel Association, attributed the fall in demand to the reduction in public spending around the country.
However, instead of lowering prices to boost sales, most manufacturers have kept their March prices of VND18.28-18.48 million ($US914-924) a ton.
With this high market price, these firms are even able to grant bigger commission for their distributors without fearing of loss, as the original price is just VND16 million ($800) a ton.
Distributors have a margin of VND500,000-600,000 ($25-30), H.C said, adding manufacturers have hiked commissions by VND200,000-300,000 a ton in the hope of improving sales.
