Steel dealers suffer billions in losses due to speculation.

Following commitments from several major steel producers not to raise prices, the market for construction steel has gradually cooled down.

Following the Ministry of Industry and Trade's decision to impose temporary safeguard tariffs on steel billets and construction steel, steel prices were driven up due to speculation in the intermediary stages. However, after several major steel manufacturers pledged not to raise prices, dealers were forced to lower their selling prices.

Currently, retail steel prices on the market have fallen to 11,000-11,500 VND per kilogram depending on the type and brand, 15% lower than at the end of March. This development has caused many places that hoarded goods with the goal of speculation, waiting for prices to rise, to suffer heavy losses. Common losses range from hundreds of millions of VND for third-tier dealers to billions of VND for first-tier dealers.

Many steel dealers suffered losses ranging from hundreds of millions to billions of dong due to "hoarding" steel when prices were high. Photo: Dau Tu (Investment)

Most commonly, secondary dealers hoard steel when prices are high, expecting them to continue rising. One store in Phung town, Hanoi, accumulated a significant amount of steel when the price was 12.5 million VND per ton, but is now selling it for only 11-11.3 million VND.

According to the owner of Yen Vinh steel dealership in Hung Yen province, the selling price has decreased by about one million dong per ton compared to the end of March, resulting in a loss of approximately 100 million dong on a shipment of nearly 100 tons imported previously. The owner stated that consumer demand is very low, and most steel shops and dealerships along the road from Pho Noi to Khoai Chau have suffered losses to varying degrees due to the significant drop in steel prices compared to when they purchased the goods 15-20 days ago.

In Hai Duong, Chien Nhung, the owner of a steel and cement retail store, also shared that the amount of inventory in the store is always between several tens and hundreds of tons, and with prices down 10-15% compared to just half a month ago, the store estimates a loss of nearly 100 million VND.

Lower-level retailers also became victims when first-tier distributors hoarded goods to profit. Before Tet (Lunar New Year), many second-tier distributors of steel manufacturers had received orders from the public at prices around 10,000 VND per kg, with quantities of about 100-200 tons, or 300-400 tons for larger facilities. However, after Tet, when first-tier distributors of steel manufacturers learned about the Ministry of Industry and Trade's imposition of temporary safeguard tariffs, they hoarded goods and withheld supplies from the system. This, coupled with the poor supply capacity of some manufacturers, caused a market surge in artificial demand.

Despite the high prices, lower-level distributors still have to accept losses, importing goods to fulfill pre-orders, resulting in losses of up to 2 million VND per ton of steel.

Mr. Nguyen Ngoc Anh, Chairman of the Board of Directors of SMC Company, a steel distributor in Ho Chi Minh City, believes that the high price of steel is partly due to problems in the distribution system, which in turn affects consumers, especially in the retail market.

According to Mr. Nguyen Van Sua, Vice Chairman of the Vietnam Steel Association (VSA), March is the usual time of year when steel demand increases, with projects restarting after the long Tet holiday. However, the desire to stockpile after the Ministry of Industry and Trade's decision to impose temporary safeguard duties (March 7th) also contributed to the increase in steel prices in the first quarter.

Despite the sharp increase in steel prices in the first quarter, according to the Vietnam Steel Association (VSA), steel inventories still stood at approximately 325,000 tons by the end of March. The market will receive an additional supply of about one million tons of steel from a series of new projects coming online this year.

"This shows that businesses are fully meeting market demand, so dealers and distributors have no reason to worry about hoarding steel," Mr. Sưa emphasized.

According to VNE