NEW DELHI, HANOI, BEIJING (Commodity Online): With India hiking duty on steel and cement in its budget, the global steel prices are set to climb up. To add to that Vietnam also will witness a surge in steel prices.
Reason for this is the power price hike of 6.8% starting next week in Vietnam. The power price hike in early March will result in more difficulties for the production activities of steel and cement.
India’s budget has already proposed a hike in duty on several items like steel and cement. With China also witnessing a surge in steel prices global prices of steel will be impacted in the coming days.
The power price hike would raise the production costs of some key industries in Vietnam, especially steel and cement production.
Some 600 kilowatt-hours of electricity is required to produce one tonne of steel ingot, so if the power price surges by 6.8% it would cost an extra VND50,000 to produce a tonne of ingot.
In 2010, the steel industry targets production of 2.8 million tonnes of steel ingot for domestic demand, so the country’s ingot producers will pay another VND140 billion for electricity, which is a big burden for them.
Though the cost of power in cement production is said to be less than in steel production, some cement producers also said the power price hike would badly impact the cement industry.
Meanwhile, the United States this week imposed preliminary duties ranging from 11 to 13 per cent on steel pipe from China to offset government subsidies.
The decision puts further strain on US-China trade relations, already tested by disputes over other US trade actions and China’s currency policy.
The United States imported $382 million of the pipe from China in 2008, compared to $130 million in 2007. Imports declined in 2009 along with the overall drop in world trade but surged late in the year as importers tried to beat anticipated duties.
All other Chinese producers and exporters will face a country-wide duty rate of 12.02 percent.\