JFE Holding Inc has delayed a decision to build a USD 3.6 billion integrated steel plant in Vietnam,saying it is worried that the poorly developed market could hinder its operations.
JFE had said earlier it would defer a decision on the project,its first outside Japan,as it assesses competitive risks.
Bloomberg quoted Eiji Hayashida president of JFE Steel Corp.,the group's steel unit as saying in an interview December 5 that"We initially said a conclusion will be reached by the end of this year,but we'll need a bit more time."
Mr Hayashida said that"Things won't go smoothly until we make sure that we'll beat the competition as many projects are being lined up to build new mills in southern China and Vietnam."
Vietnam Steel Association Deputy Chairman Nguyen Tien Nghi blamed this problem on provincial authorities around the country,saying they have licensed projects,mainly small ones with outdated technologies,without careful consideration.
He said that the resultant development has been haphazard and there is an oversupply of regular steel.
He said that"We have too many steel mills,but none with good financial and professional capabilities like JFE.We have a surplus of regular products like construction steel,but lack high-technology products like hot laminated steel and stainless steel."
He traced the glut to the situation in 2005 when prices rose,making the Vietnamese steel industry attractive for both local and foreign investors.
There are some 400 steel plants in the country with a combined capacity of 10 million tonnes of construction steel,far in excess of the demand of six million tonnes this year.
The country's cold laminated steel mills have a capacity of over three million tons,double the demand.
