It is reported that Vietnam Steel Association has officially asked the Ministry of Industry and Trade to allow its members to raise steel prices.

In the document it sent to the ministry the association said that "Steel price increases prove to be indispensable as ingot steel prices are skyrocketing.”

The association said that in fact, some southern steel producers have raised their sale prices already. Pomina, for example, has raised the sale price from VND 16.426 million per tonne to VND 17.45 million per tonne, while Vinakyoei has raised the price from VND 16.55 million per tonne to VND 17.5 million per tonne. Other steel producers are offering steel at VND 17 million per tonne on average.

Southern steel producers said that they now have to import ingot steel at high prices. Vietnam Japan Company, for example, has signed a contract to import ingot steel at USD 1,180 per tonne, while finished steel is selling at USD 1,000 per tonne.

Mr Pham Chi Cuong chairman of Vietnam Steel Association said that Vietnam Steel Association pledged to keep steel prices in place until the end of June 2008, if the ingot steel price did not exceed the USD 900 per tonne threshold. At the time of the commitment, ingot steel was at USD 810 per tonne, while the sale prices offered by northern producers were at VND 15.2 to VND 15.4 million per tonne and the prices offered by southern producers were at VND 15 to VND 15.3 million per tonne. However, as the ingot steel price has been skyrocketing, some steel producers had to raise their sale prices in May 2008.

Mr Cuong said that "Raising steel prices proves to be unavoidable. Steel mills cannot buy ingot steel at USD 1,300 per tonne and then sell finished products at USD 1,000. However, Mr Cuong confirmed that the steel price will not increase sharply, because the purchasing power is low in the rainy season. In the past three months, VSA members sold only 260,000 tonnes of steel a month, a decrease of 60,000 tonnes compared to previous months.

Mr Cuong added that "The sale prices will be decided by the market.”