Vietnam asks steelmakers to cut exports as domestic prices surge

The Vietnamese government has asked domestic steelmakers to boost production and limit exports in an effort to fight off soaring steel prices.

"We should prioritize supplies to the domestic market to ensure price stability," Deputy Prime Minister Le Minh Khai said in a statement released early this month. Such an industry intervention by a top Communist Party official is considered highly unusual.

Import prices of hot-rolled coil steel, a staple for construction material, has exceeded $1,000 per ton, touching highs not seen in 13 years. Prices have jumped 50% from the start of the year.

The main driver for the rising prices is China, which commands the majority of global steel production. Supplies from the Asian power have recently been on the decline.

International steel prices in general have steadily climbed since demand for steel remained robust even under the coronavirus pandemic. Separately, speculation has grown since the beginning of the year about China ending rebates for value-added taxes on exported steel, spurring speculative steel purchases.

The Chinese government did indeed end up removing value-added tax rebates on major steel products on May 1, keeping import prices on an upward trend.

Vietnam is the largest steel importer in Southeast Asia, taking in 13.2 million tons of steel last year -- most of it from China.