Sales volumes in Vietnam fell for the construction-steel industry last year by about 8% compared to the previous year, according to the Vietnam Steel Association (VSA).

During 2012, members of VSA produced more than 4Mt of crude steel, a year-on- year decline of over 7%. About 4.48Mt of construction steel were sold last year.

"Last year continued to be a difficult year as everyone continued to reduce their budgets, which led to slow and stagnant production," said Pham Chi Cuong, chairman of VSA.

Lower sales meant lower prices but input costs kept changing, with signs of increases. Thus, many steel manufacturers were forced to cut output, and some became bankrupt, commented Cuong.

High inventories also plagued the steel industry last year. By the end of December the construction steel inventory totalled nearly 335kt.

"Because of weak management over many years, the output of many manufacturers was much higher than the real demand," Cuong said. "Meanwhile, sales could not recover because of the global recession, leading to high inventories."

The pressure became worse when tariffs were added to imported steel as part of World Trade Organisation commitments in the region. Many companies found export channels, but still encountered difficulties caused by trade barriers.

About 2Mt of steel and steel semis were exported, generating revenue of about US$1.65.

VSA predicted that the challenges for the steel industry will continue in 2013, as bad debts of banks and the sluggish real estate market would not be easily resolved this year.

Sales in January are also expected to be slower because of the upcoming Tet (Lunar New Year) holiday.

Abridged from Daily Vietnam News, Hanoi; 11 Jan 2013