Business

Weak currency, high costs hurt steelmakers

Declining steel prices and the devaluation of the domestic currency have made it difficult for steelmakers to meet their business targets for the year, and share prices of many steelmakers have plunged accordingly over the past six months, an industry executive has said.

The year could be tough for the steel industry due to the challenges posed by the foreign exchange rate and high interest rates, said Pomina Steel (POM) chairman Do Duy Thai.
Declining steel prices and the devaluation of the domestic currency havemade it difficult for steelmakers to meet their business targets forthe year, and share prices of many steelmakers have plunged accordinglyover the past six months, an industry executive has said.

The year could be tough for the steel industry due to the challengesposed by the foreign exchange rate and high interest rates, said PominaSteel (POM) chairman Do Duy Thai.

"It will be hard forus to complete the year's plan to achieve a profit of 612 billion VND(29.5 million USD) as our company has to cover losses caused by exchangerate fluctuations," Thai said in an interview with the newspaper Dau tuChung khoan (Securities Investment).

POM, which leads the steel market with a 15.2-per-cent market share, currently has to import 70 percent of its raw materials.

SMC Trade and Investment Co (SMC) was also compelled to reduce its netprofit target from 90 billion VND (4.3 million USD) to 80 billion VND(3.85 million USD) and extend its estimated time of completion for itsHiep Phuoc project since costs have risen sharply. "However, we have toimport only 30 percent of raw materials, the difficulties due toexchange rate are less serious than in other companies," the companysaid.

Dai Thien Loc Co (DTL) was trying to restrictexchange rate risks by promoting exports, but the weakness of the worldeconomy has significantly affected the company's export performance,causing the DTL to trim its earnings targets by about 19 percent.

Vietnam-Italy Steel Co (VIS) said the slowdown in real estate sales and construction had also hurt the industry.

Shares of steelmakers on both national stock exchanges have fallen by7-29 percent since May this year, with shares of Hoa Sen Group (HSG),Huu Lien Asia Corp (HLA), Tien Len Corp (TLH), Vietnam-Germany SteelPipe (VGS) and Phuc Tien Co (PHT) falling below their face values./.
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