The Vietnam Steel Association says that hundreds of containers of scrap steel are stuck at Hai Phong due to regulations set by the Ministry of Natural Resources and the Environment.
Thousands of metric tons of scrap steel are delayed in warehouses at the Hai Phong Port and importers are claiming lost storage fees and risks to re-export prospects the longer the steel waits.
According to Vietnam Ministry of Natural Resources and the Environment regulations, only warehouses that are up to code for environmental safety may be used to store scrap steel. The matter is complicated by the fact that steel producers can’t afford to import scrap steel themselves. Instead, most banks define a specific percentage of loans based on the value of each batch. So to import sufficient materials, steel producers need commercial companies’ assistance.
VSA Chairman Pham Chi Cuong said that the regulations burden steel importers and producers by requiring them to import and store through with intermediaries that may not follow the laws.
Director of the Hoa Phat Steel Company said that his company has imported around 10,000 metric tons of scrap steel but has had to open letters of credit for 50 percent of the volume and has to ask help from commercial companies for the remaining figure. At present, Hoa Phat has around 100 containers of scrap steel waiting at the Hai Phong Port at $6-12 per container per day.
VSA says the backlog has been growing for a year. Companies that refine steel billet from scrap, such as Thai Nguyen, Southern Steel and Da Nang, which import scrap steel through outside firms, face the same situation.
Steel producers have said that commercial companies often immediately transfer scrap to steel producers after offloading, and that MoNRE could inspect the shipments then.
A steel development plan approved by the government in 2001 emphasizes production of billet to reduce dependence on imports. Six projects on producing steel billet by electricity kiln from scrap steel at more than 3million metric tons per year are about to come on line as a result. In the next several months, Hai Phong is expected to receive large shipments of scrap, and if the above problem is not solved. Vietnam Net Bridge