The stock dropped VND500, or 2%, to close at VND24,000 on the Ho Chi Minh Stock Exchange. The construction-steel producer based in the northern province of Hung Yen has retreated 76% from a high on November 1, 2007.
Nam Vang Corp. fell 2.8% and Asia Huu Lien Joint-Stock Co. lost 0.5% on the Hanoi Securities Trading Center.
The country’s benchmark interest rates of 12%, the second highest in Asia, have made it difficult for companies to borrow money and slowed economic expansion. Industry and construction, which make up 40% of the economy, grew 7.1% in the first three quarters, down from 10.1% in the same period last year.
“Investors have become quite pessimistic about steel company profits this and the last quarter, and even going into the first quarter next year,” said Phung Trung Kien, an analyst in Hanoi at the securities unit of Vietnam Joint-Stock Commercial Bank for Private Enterprises.
Slowing construction has created stockpiles of more than 1.8 million metric tons, Phap Luat Thanh Pho Ho Chi Minh newspaper reported November 15, citing Nguyen Tien Nghi, vice chairman of the Vietnam Steel Association. Vietnam won't be able to use up the surplus until at least the end of the first quarter next year, Nghi reportedly said.
Global demand drops
Mills are slashing output globally as the economic slowdown curbs demand from builders and carmakers. ArcelorMittal, the world's largest steelmaker, said last week it would reduce production of flat carbon steel by as much as 35% in the US and 30 percent in Europe.
Hot-rolled coil prices, a benchmark for the steel industry, have declined 29% to $770 a short ton in the past six months, according to researcher Metal Bulletin. A short ton is about 9/10 of a metric ton.
In Vietnam, three of the four listed steel companies fell Tuesday. Hanoi-based Nam Vang slid VND1,100 to close at VND38,000, the lowest since October 29.
Asia Huu Lien, based in Ho Chi Minh City, declined by VND100 to close at VND19,800. HCMC Metal Corp. was unchanged at VND14,000.
The central bank raised rates three times earlier this year to as high as 14%, prompting banks to increase lending rates to as much as 21 percent, cutting demand for loans. The State Bank of Vietnam has cut interest rates twice in the past month, though borrowing costs are still the highest in Asia after Pakistan. (Bloomberg)
