Scrap steel, to import or not?

16:45' 17/04/2008 (GMT+7)
VietNamNet Bridge – 7,000 tonnes of scrap steel have been detained at Hai Phong and HCM City ports by competent agencies, though the government asked the agencies to clear the import consignments to serve steel mills’ production. What should Vietnam do, allow the import of scrap steel or not?
In September 2007, consignments of scrap steel, comprising metal cans which were pressed into blocks, worth $2.5mil, imported by HCM City Metalware Company, Anh Trang Company Ltd, Techmart Steel, Hoa Phat and Dinh Vu Steel Company arrived in Hai Phong and HCM City ports. However, the consignments were detained at ports as state management agencies decided the cans were a kind of waste, which must not be imported to Vietnam under the Law on Environmental Protection.
The government, after considering the appeal from importers, instructed management agencies to clear the 7,000 tonnes of scrap steel, putting an end to the prolonged arguments among state agencies and enterprises about whether to clear the consignments.
However, the case was not resolved with the government’s decision.
Tran Hong Ha, Head of the Environmental Protection Agency, sent a document to six importers, asking them to present plans to deal with the imported scrap. The plans must be submitted to the agency prior to April 15. The consignments will be cleared after the agency finds the plans reasonable.
However, the problem lies in the fact that agencies have set requirements which prove to be impossible for enterprises to implement. For example, they asked the importers to cut the blocks of steel and weed out the impurities.
“I think that it is impossible to do that. Meanwhile, the impurities will automatically disappear when the scrap steel is melted at a high temperature,” said Pham Chi Cuong, Chairman of the Vietnam Steel Association.
However, state agencies do not think so.
Deputy Prime Minister Hoang Trung Hai promised that the case will be settled soon to help enterprises to return to normal production.
Meanwhile, Prime Minister Nguyen Tan Dung in a recent meeting with enterprises, discussing measures to fight inflation, said that Vietnam is still very poor and it has to accept buying scrap steel, though the material is not as clean as other kinds of material.
Steel mills still like importing scrap steel to make finished steel products because of the low cost. The scrap steel price is $200/tonne cheaper than ingot steel. While ingot steel prices have soared to $900/tonne from $700/tonne late last year, scrap steel proves to be an acceptable source of materials. Cuong said that Japan and Taiwan are also laminating steel from scrap steel.
The Prime Minister assigned the Ministries of Natural Resources and the Environment and Industry and Trade to promulgate regulations on the quality of scrap steel to be imported to Vietnam. However, no considerable progress has been made over the last three months, while the tardiness will affect enterprises’ business.