Tax deferrals help lift steel demand

Ingots used to produce steel are stacked by Viet Duc Steel Co in Binh Xuyen Industrial Zone in the northern province of Vinh Phuc. — VNA/VNS Photo Tran Viet

HA NOI — The Ministry of Industry and Trade forecast steel consumption would surge during the remaining months of the year thanks to the effectiveness of the Government's Resolution 13 on boosting production and supporting the market.

Resolution 13, which was issued in May, has granted some enterprises a deferral on paying value added tax, corporate income tax and land use fees along with a 50 per cent cut on land rental this year.

However, steel prices would not surge and were even likely to inch down as steel producers aimed to clear their inventories, the ministry said.

Chairman of the Viet Nam Steel Association Pham Chi Cuong said that after a long period of stagnation since early this year, the steel market could rebound with higher consumption from September.

Besides the effectiveness of the Government's ongoing policies, steel consumption would also surge in the fourth quarter, a time when investors often spur construction to finish projects before the year's end, Cuong said.

However, the VSA recommended the Government to reduce the value added tax from the current 10 per cent to 5 per cent to encourage consumption as purchasing power remained low.

According to the VSA, the country consumed 2.6 million tonnes of steel in the first seven months of the year, down 10.6 per cent over the same period last year.

As steel producers cut their production due to low demand, unsold inventory of steel and steel ingot until the end of June was at 350,000 tonnes and 500,000 tonnes.

As the real estate market hasn't rebounded, this year's steel consumption would reduce by roughly 10 per cent over last year, according to VSA forecasts. — VNS