LONDON (Commodity Online): Steel market is on a slide with almost all producing countries witnessing a fall in prices.

India and Vietnam reported a slide in Steel prices in the past few weeks. Vietnam’s domestic steel makers recently have raced to lower the steel prices although the peak construction season starts because the cheap imported steel is flooding the market.

The movement showed that local steel producers are fighting to obtain market shares in the home market that is developing impressively at this time thanks to the government’s demand stimulus policy.

Vietnam Steel Corporation lowered the steel price by VND 200,000 per tonne from mid-October. The move is the consequence of the increasing steel imports in the recent time and massive rise of new steel mills.

In India, Steel Authority of India Ltd (SAIL) has reduced prices of flat products by Rs 750-1,500 a tonne across categories, on account of weak global trends.

While the other players were yet to decide, most of the steel producers said the market was sluggish, led by weak Chinese sentiments. And that prices of flat products used by consumer durables and automobile majors could drop by Rs 500-1,500 a month. At present, in the flat segment, hot rolled coil (HRC) prices in the domestic market are Rs 31,000-32,000 a tonne.

Vietnam’s Steel manufacturing capacity reached approximately seven million tonnes a year, showing a high surplus against the consumption and forcing steel producers to enter into a tense competition.

In September 2009, the steel sales in Vietnam declined by 100,000 tonnes month on month but still jumped 200% compared with last September.

Domestic market shares of Vietnamese steel makers are being narrowed due to the flooding of imported steel. Last month, over 40,000 tonnes of rolled steel was imported to Vietnam with a price of around VND 500,000 to VND 700,000 per tonne.

Rolled steel price from Malaysia to Vietnam now is cheaper by VND 700,000 per tonne against the domestically made steel because Malaysia enjoys Vietnam’s import tariff exemption of 0%. Foreign made rolled steel accounts for 70% of the domestic market share, jumping strongly from 28% in 2008 early. The fact is alarming.

For Indian steel makers, the Chinese market has been seesawing, with prices falling below the $500 a tonne level during the middle of last month. Though prices have rebounded in China over the past week, there was large scale de-stocking due to the year-end and the market was volatile. Average global HRC prices, $590 a tonne in September, were now at $550 a tonne.

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