Vietnam's steel industry will face great difficulty ahead, since China, the former's biggest steel billet import market, has nullified a 13-percent export tax rebate on the product from April 1, according to the Vietnam Steel Association (VSA) on Friday.

Prices of Chinese steel billet have climbed to around 425 US dollars per ton after April 1, compared with below 410 dollars per ton before the day. In the first quarter of this year, the Chinese billet accounted for more than 42 percent of Vietnam's total billet import, since its prices were around 10 dollars per ton lower than those of similar products of many other countries.

Vietnam is estimated to consume 3.5 million tons of steel billet this year, 71.4 percent of which will come from import, said the VSA. The country's seven steel billet makers with designed annual capacity of some 1.5 million tons are facing material shortage, so it will have to import up to 2.5 million tons of the product, mainly from China, Russia, Ukraine and Malaysia, this year, up 8.7 percent over last year.

Supplies of steel scraps in both Vietnam and other countries are becoming thinner and thinner, the VSA said, noting that many local billet producers are turning to domestic iron ores. However, the country has yet to exploit the Thach Khe iron ore mine with a reserve of 540 million tons in central Ha Tinh province, since investment for a metallurgy complex to fully tap the mine is too big: up to 3 billion dollars.

Vietnam imported 467,000 tons of steel billet valued at 180 million dollars in the first quarter, posting year-on-year decreases of 7.6 percent in volume. Last year, it imported nearly 2.3 million tons of steel billet, of which 21 percent came from China.

The VSA estimated that Vietnam recorded sales of 55,000 tons of finished steel of all kinds in the first three months of this year, similar to the average amount of the products consumed in a quarter last year. Local steel makers now can export their products to South Asian countries which need huge amounts of the material to overcome tsunamis' aftermath, the association stated.