Consumption paradox record still heavy losses of Vietnam Italy Steel

According to the Vietnam Steel Italy, in 2015, for steel companies in general are considered time recovering from the recession in the construction sector. For Vietnam Italy Steel, this is a year in which production and consumption of steel reached its highest level since its establishment (production of 283 thousand tons and sales volume of 282 thousand tons, 113 % of plan). However, after the efforts to complete the proposed plan from the beginning of the year, the company again loss of nearly 52 billion.

 

The cause of losses is due to:

 

-In 2015 the market price of steel scrap unpredictable changes, constantly falling scrap prices led to steel prices decrease. Steel selling prices and react faster to speed steel prices fell faster than scrap prices. In 2015, steel prices down 25 times with a drop more than 3 million / ton, higher than in 2014 dropped only 12 times with a drop of 1.2 million / ton.

 

-From June, stock prices in Shanghai trading platform for more than 50% decline had a strong impact on the Chinese steel market. In particular, the Chinese government's RMB devaluation did billet prices in China dropped sharply affect Vietnam market. With the volatility of this, China has boosted exports to Vietnam billet making ingot production plants in the country can not compete, to stop production or produced in moderation. Vietnam Italy Steel could not avoid the negative impact should embryo yields reached only 60% capacity.

 

-6 Months of the end of 2015 due to the impact of the devaluation of the yuan and the Fed is expected to raise interest rates led to the USD in the country makes the price volatility of steel products VIS incur a large expense exchange rate differences.

 

Scale 6/2015, as prescribed by the State for the requirements of steel scrap importer is required to deposit 20% of the value of imported goods prior to import. This is also a cause of increased cost of capital of the company.

 

Out-out, Vietnam-Italy Steel has a specific characteristics different from steel production units in the sector which is produced from upstream. The main raw materials used to produce steel products scrap VIS is fully imported from abroad. Import time ranging from 2-3 months. So, whenever the market price fluctuations, grass material times the plant has not yet arrived at a huge discount compared to the price of the market.

 

Remedies for 2016

 

Identify the difficulties and challenges in 2015, Vietnam Italy Steel has "planned" lessons learned for 2016. Accordingly, the company launched the solution hit mainly to the supply of materials that reasonable price, timely and improve market forecasting, inventory restrictions ...

 

For the production, the company determined to optimize local materials, reducing waste imports, increased imports of billet production for civil ... In addition, the company is also boosting consumption passive, actively expand the market, maintain and enhance the brand image, ensure the regime for employees to improve the efficiency of production and business ...