(Tiểu luận) tiểu luận kinh tế vi mô analysis of the government’s policies to stabilize the steel prices

Trang 1 TRƯỜNG ĐẠI HỌC NGOẠI THƯƠNGKHOA: KINH TẾ QUỐC TẾ=====000=====TIỂU LUẬN KINH TẾ VI MÔAnalysis of the government’s policies to stabilize the steel prices Trang 2 TRƯỜNG ĐẠI HỌC NG

TRƯỜNG ĐẠI HỌC NGOẠI THƯƠNG

KHOA: KINH TẾ QUỐC TẾ

=====000=====

TIỂU LUẬN KINH TẾ VI MÔ

Analysis of the government’s policies to stabilize the steel prices

Sinh viên thực hiện: Trần Anh Khánh Chi

Mã SV: 2312280014

Số thứ tự: 13

Lớp, khóa: Anh 01, CTTT QTKDQT Khóa 62 Lớp tín chỉ: KTE201E K62TTQT.1

Giảng viên hướng dẫn: TS Nguyễn Thị Tường Anh

Hà Nội - 12/2023

TRƯỜNG ĐẠI HỌC NGOẠI THƯƠNG

KHOA: KINH TẾ QUỐC TẾ

=====000=====

TIỂU LUẬN KINH TẾ VI MÔ

Analysis of the government’s policies to stabilize the steel prices

Sinh viên thực hiện: Trần Anh Khánh Chi

Mã SV: 2312280014

Số thứ tự: 13

Lớp, khóa: Anh 01, CTTT QTKDQT Khóa 62 Lớp tín chỉ: KTE201E K62TTQT.1

Giảng viên hướng dẫn: TS Nguyễn Thị Tường Anh

Hà Nội - 12/2023

TABLE OF CONTENTS

INTRODUCTION

● Reasons for writing

● Objectives of the research topic

● Subjects of the research topic

METHODS AND PROCEDURES

● Data collection method

● Data analysis method

RESULTS - DISCUSSIONS

● General theory about the research topic

● Current status of the research problem

● Solutions

CONCLUSION

REFERENCES

Inthecontextofworldtradeintegration,determiningandadjustingpricesofessentialgoodsisoneof theextremelyimportanttasksofgovernments.Inparticular,foritemswithastrategicrolesuchas constructionmaterials,pricestabilizationnotonlyaffectsthedevelopmentoftheconstructionindustry butisalsorelatedtopeople'slivesinacountry.However,interveninginthemarkettostabilizeprices alsohascertainadvantagesanddisadvantages,affectingeconomicandsocialefficiency.Therefore, researchingandanalyzingtheVietnamesegovernment'spoliciestostabilizethepricesofconstruction materialsisatopicofhighpracticalandtheoreticalsignificancetoday

● REASONS FOR WRITING

Constructionmaterialsareknownasanimportantandessentialcommodity,havingagreatimpacton theentireeconomicandsociallifeofVietnam,especiallyintheperiodofindustrializationand modernization,aswellasinfrastructuredevelopmentasitistoday,contributinggreatlytoGDP, attractingmanyworkersandcreatingmanyproductstoserveotherindustriessuchastransportation, industry,housing, However,thepriceofconstructionmaterialsoftenfluctuatesaccordingtomarket supplyanddemand,influencedbymanyfactorssuchasproductioncosts,transportationcosts,taxes, fees,exchangerates,inflation,competition,speculation,etc.corruption Themoresocietydevelops, thegreatertheroleofconstructionmaterials.Whenconstructionmaterialspricesincreaseandfluctuate strongly,itdirectlyaffectstheconstructionindustryaswellastheeconomyandsociety.Forexample, whensteelpricesincrease,itcancauseasupplyshortage,increaseinvestmentcosts,reducebusinesses' profits,andaffecttheprogressandqualityofconstructionprojects.makingitdifficultforpeopletobuy houses,increasingtheriskofinflation Onthecontrary,whensteelpricesfalltoomuch,itcancause oversupply,reduceproductiondemand,andreducetheincomeofsteelproducers.businesses,affecting theuseandprotectionofresources,causingwasteandenvironmentalpollution

Facedwithpricefluctuationsofconstructionmaterials,thegovernmentoftenhasinterventionpolicies tostabilizeprices,toensuretherightsofstakeholders,maintainmacroeconomicstabilityandpromote sustainabledevelopment.Priceinterventionpoliciescanbesettingceilingprices,floorprices, benchmarkprices,preferentialprices,concentratedwholesaleprices,maximumretailprices,stabilized prices,auctionprices Dependingonthegoal,specificperiodsoftime,thegovernmentwillchoose appropriatepoliciestointerveneinthemarket.However,thegovernmentalsoneedstocarefully considerpricingstrategiestooptimizebenefitsandcosts,aswellashaveeffectiveimpactson distributionandeconomicdevelopment.Ifinterventionisexcessiveorimproper,itcancausemarket fluctuations,wasteresources,affectcompetition,production,businessandconsumptiondynamics,and causeinjusticeinsociety

Therefore,researchingandanalyzinggovernmentpoliciestostabilizepricesofconstructionmaterials isatopicofpracticalandtheoreticalsignificance.Thetopichelpsevaluatetheeffectivenessandimpact ofpriceinterventionpoliciesthathavebeenandarebeingappliedinVietnam,andproposessolutions toimproveandperfectpoliciesinthecontextofglobaleconomicintegration Thetopicalsohelps

● OBJECTIVES OF THE RESEARCH TOPIC

➢ The general goal of theresearchistoresearchandanalyzegovernmentpoliciestostabilizepricesof constructionmaterialsinVietnam

➢ Thespecificgoalsoftheresearch:

- Analyze the government's priceinterventionpoliciestostabilizethepriceofconstructionmaterialsin Vietnam in the period 2018-2023, the advantagesanddisadvantages,effectivenessandimpactofthe policies

-Proposesolutionstoimproveandcomplete the government's price intervention policy to stabilize the priceofconstructionmaterialsinVietnam

-Learnaboutpriceinterventionpolicies,specificallypriceceilingandfloorpricepolicies,the impact oftheabovetoolsonmanufacturers,consumersandthegeneralmarket

- Contact the Vietnamese government's price control policy when the government implements the Covid19epidemic

● SUBJECTS OF THE RESEARCH TOPIC

Theresearchobjectoftheprojectistheconstructionsteelmarket.Inaddition,supply,demand,price, andvolatilityofthismaterialinthemarket,aswellasthegovernment'spriceintervention policies on the steel market, suchassettingpriceceilings,floorprices,andprices.fixed,ormarketprice.Addedto these are the objectives, rationale, and form of these policies, as wellastheirimpactontheefficiency, distribution,andwelfareofconstructionmaterialsmarkets

METHODS AND PROCEDURES

The research method of the topic includestwomainmethods:datacollectionmethodanddataanalysis method

● Data collection method:This isthemethodofusingavailabledatasourcestocollectinformation related to the research topic Data sources can be reports, statistics, documents of state agencies, international organizations, associations, businesses, websites, articles, and previous studies Collecteddatamustensurecompleteness,accuracy,representativenessandupdate

● Data analysis method:Thisisamethodthatusestools,techniques,andmodelstoanalyze,evaluate, compare, and verify collected data Data analysis methods can be descriptive analysis, regression analysis, variation analysis, correlation analysis, factor analysis, structural analysis Data analysis methods will help findrelationships,trends,influences,andimpactsoffactorsrelatedtotheresearch topic.Theresultsofdataanalysiswillbepresented in the form of tables, charts, images, mathematical formulas foreasyunderstandingandinterpretation

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RESULTS - DISCUSSIONS

● GENERAL THEORY ABOUT THE RESEARCH TOPIC

1.1.Researchonthetheoryofsupplyanddemandofgoods

1.1.1.Demandofgoods

Impactofpriceonquantitydemanded

When price increases, quantitydemandeddecreasesandconversely,whenpricedecreases,quantity demandedincreases

ImpactofotherfactorsonDemand

+Consumerincome:Whenincomeincreases,demandincreasesandviceversa

+ Pricesofrelatedgoods:Forsubstitutegoods,whenadecreaseinthepriceofonegoodreducesthe quantity demandedofanothergood.Whenadecreaseinthepriceofonegoodincreasesthedemandfor anothergood,thosetwogoodsarecalledcomplementarygoods

+Consumerpsychology,customs,andtastes:Tasteistheconsumer'spreferences,habits,orpriorities foreachtypeofgoodorservice

+Expectationsaboutthefuturecanaffectcurrentdemand

+Population:Thisisanimportantfactoraffectingthedemandfor goods As the population increases, thedemandforgoodswillalsoincrease

+ Government policies: Governmentpoliciesfromtimetotimeaffectconsumerincomelevelsand pricesofgoodsandservices.Therefore,itaffectsthedemandforgoods

1.1.2.Supplyofgoods

Supplyisthequantityofagoodorservice that sellers are able and willing to sell at different prices duringagivenperiodoftime

Impactofpriceonquantitysupplied

Whenpriceincreases,quantitysuppliedincreasesandviceversa

ImpactofotherfactorsonSupply

+Inputfactorprices:Ifinputfactorpricesdecrease,productioncostsdecrease

=>Profitsincreasesosupplyofgoodsincreasesandviceversa

+ Production technology: Affects production costs and quantity of output products As technology improves,productivityincreasesandsupplyincreases

+ Government policiestolimitorencourageproduction(throughtaxinstruments)alsodirectlyaffect supply

+ Expectations: producers'forecastsaboutfuturemarketdevelopmentsthataffectcurrentpalace.If expectations are favorableforsellers,thecurrentsupplywilldecrease,thesupplycurvewillshifttothe left,andviceversa

+ The number ofsellershasadirectimpactonthenumberofgoodssoldonthemarket.Whenthereare many sellers, the supply of goods increases, causing the supply curveofgoodstoshifttotherightand viceversa

1.1.3.Marketbalance

- Surplusisastatewheredemandislessthansupply

- Ashortageisasituationwheredemandisgreaterthansupply

Marketequilibrium

- Marketequilibriumisastateinwhichsupplyisjustenoughtosatisfydemand,sothere is no pressure to change prices At this price, we have equal supply and demand Then, the intersection point between the supply and demand curves is the equilibrium point and the quantitysuppliedandquantitydemandedatthispricearetheequilibriumquantity 1.2Priceceiling

1.2.1Conceptofpriceceiling

Theceilingpriceisthemaximumpricethatthesellermustpay

1.2.2Purposeofapplyingceilingprices

Whensettingpriceceilings,thegovernment'sgoalistocontrolprices to protect consumers When the equilibrium price in the market is consideredtoohigh,bysettingalowerpriceceiling,thegovernment hopes that consumers will buy thegoodsatalowpriceandthisisconsideredsociallysignificant.great opportunityaslow-incomepeoplestillhaveaccesstoimportantgoods

1.2.3Principlesforsettingceilingprices

Theceilingpriceissetlowerthantheequilibriumprice

1.3Floorprice

1.3.1Conceptandclassificationoffloorprices

Thefloorpriceistheminimumpriceset by the state In this case, the buyer cannot bid at a price lower than the floor price When setting a floor price foracommodity,thestatewantstoprotecttheinterests ofmanufacturers

1.3.2Characteristicsoffloorprice

Thefloorpriceissethigherthanthemarketequilibriumprice

1.3.3Impactoffloorpricesonthecommoditymarket

When setting a floor price for acommodity,thestatewantstoprotecttheinterestsofthosewhosupply the goods Whenthestatebelievesthattheequilibriumpriceinthemarketislow,thestatecanstipulate afloorprice-asaminimumpricethatthetransactionpartiesmustcomplywith-thatishigher

● CURRENT SITUATION OF STEEL MARKET IN VIETNAM

2.1.CharacteristicsofVietnam'ssteelindustry

2.1.1.Currentstatusofsteelindustrydevelopment

Vietnam'ssteelindustryisstillveryyoung,builtinthe60softhe20thcentury,withthebirthofthefirst batchofcastironin1963,butitwasnot until 1975 that the first batch of steel was born at the iron company Thai Nguyen steel During theperiodfrom1975to1990,Vietnam'ssteelindustrydeveloped

Since 1990,Vietnam'ssteelindustryhashadmanyinnovationsandstronggrowth.Theestablishment

of Vietnam Steel Corporation in 1990hasmadeanimportantcontributiontothedevelopmentand stability of the industry Theyear1996markedthetransformationofthesteelindustrywiththebirthof fourjointventuresteelproductioncompanies:Vietnam-JapanSteelJointVenture(Vina Kyoei), Viet

Uc (Vinausteel), Viet Han (VPS)andVietnam-Singapore(Nasteel)withatotalcapacityofabout 840,000 tons/year From 1990 until now, many private enterprises and joint ventures with foreign countries have been established,Vietnam'ssteelindustryhasreallydevelopedstronglywithatotal capacity of up to 6 million tons/year Currently, there are 3enterpriseswithlargecapacityonthe market: Southern Steel Company with acapacityof910,000tons/year,Viet-PominaSteelGroupwith

a capacity of 600,000 tons/year,ThaiNguyenIronandSteelCompanywithacapacityof550,000 tons/year

Basically, steel products include two types: long steel and flat steel.Longsteelincludessquarebillets, barsteel,wiresteel,constructionshapedsteelandsteelpipes.Longsteeliswidelyusedinconstruction, mechanical engineering and the energy industry Flat steel,ontheotherhandincludesflatbillet,hot rolled steel coil (HRC), cold rolledsteelcoil(CRC),electrostaticsteelsheet(OCS),hotdipgalvanized steel (HDG) and heavy steel sheet Flat steel is mainly used in the automotive industry, heavy machinery,pipesandtubes.

2.1.2.Existingsurplusandshortage

AccordingtoareportbyVietnam Finance and Investment, Vietnam's steel industry is facing a paradox that has notbeenresolvedforalongtime.Thereisanoversupplyofconstructionsteel,butaserious shortage of production materials and steel for supporting industries This is also the source of the

"skyrocketing" increases in steel prices from the beginning of2022untilnow.Thisnotonlymakesthe constructionindustry"wobble"butalsoaffectstheoverallgrowthoftheeconomy

Accordingtocurrentstatistics,thetotalproductioncapacityofthedomesticsteelindustryis about 30 milliontons/year,rankingfirstamong Southeast Asian countries, while Vietnam's steel industry is only operating at less than 70%ofcapacity.design.Domesticproductionincreasedsharply,butinthefirst5 monthsof2022,thewholecountryspentover4billionUSDtoimportmore than 5.68 million tons of ironandsteelofallkinds,anincreaseof1.9%overthe same period The largest import is from China with a volume accounting fornearly50%,reaching2.6milliontons,worthmorethan1.83billion USD

The steel industry in 2023 has a slight recovery The steel industry is facing many difficulties, especially the sharp declineinstandardcaststeelpipepricesindemandanddelayedconsumption, leading to increased inventory Inputcostsremainhighandtherearefluctuationsrelatedtoincreasesin loaninterestratesandchangesinexchangerates

2.2.Pricedevelopmentsandgovernmentinterventionpolicies

2.2.1.Pricedevelopmentsoverthepastfiveyears

AccordingtotheVietnamSteelAssociation(VSA),inMarch2021,theGovernmentset the ceiling price for members of the steel associationat15,000VND/kg.Thepurposeofthisregulationisto stabilize domestic steel prices, avoiding the situation of pushing prices up, causing difficulties for constructionbusinessesandpeople

Tradeprotectionpolicyisapolicyinwhichthegovernmentapplies measures to limit and regulate the flowofforeigngoodsenteringthedomesticmarket.Thepurposeofthispolicyistoprotectdomestic productionandconsumptionfromunfaircompetitionfromforeigngoods

One of the most common trade protection measuresisimposingimporttaxesonsteelproducts.Import tax is an amount ofmoneythatanimportermustpaytothegovernmentwhenimportingacertainitem Import taxes have the effect of increasing the cost of foreign goods, reducing their competitive advantagecomparedtodomesticgoods

TheVietnamesegovernmenthasappliedimporttaxesonsteelproductsformanyyears,toprotect the domestic steel industry from the intrusion of steel from China, Korea, Japan, and other countries According to Decision No 160/2008/QD-TTg of the Prime Minister, importtaxonstainlesssteelis 5%,shapedsteelis10%,hotrolledsteelcoilis15%,coldrolledsteel coil is 20% , and steel pipes are 25%

However,tradeprotectionpoliciesalsohaveundesirableconsequences,suchasincreasingproduction costs, reducing the efficiency ofresourceallocation,reducingthecompetitivenessofthedomesticsteel industry, and disturbing international trade relations Therefore, the government needs to have consistent,balanced,andflexiblepoliciestoprotectthedomesticsteelindustryinareasonable and effectiveway

● SOLUTIONS

Thepolicyofstabilizingthepriceofsteelproductsisoneoftheimportant policies of the government

to protect the domestic steel industry, stabilize the market, and promote economic development However,thispolicyalsoencountersmanychallengesandlimitations,suchas reducing the efficiency

of resource allocation, reducing the competitiveness of the domestic steel industry, and disturbing international trade relations Therefore, there needstobesolutionstoimprovepricestabilitypolicies forsteelproducts,toincreaseefficiency,suitability,andflexibility

One possible solution is to switch from a direct price intervention policy to an indirect price intervention policy A direct price intervention policy is a policy in which the government sets a maximum or minimum price for steel products, such as aceilingprice,floorprice,orfixedprice.This policy can causeunwantedconsequences,suchasshortages,surpluses,orblackmarketpenetration.An indirect price intervention policy is one in which the government influences prices through other measures,suchastaxes,subsidies,orimportrestrictions.Thispolicycanbemoreflexible,less likely tocauseexcessiveintervention,andcanbeadjustedaccordingtomarketconditions

Anothersolutionthatcanbeproposedistoincreasecooperationwithothersteelproducing countries,

to unify regulations and standardsonquality,safety,andenvironment.Thiscanhelpreduceunfair competition, avoid trade disputes, and enhance the reputation of the domestic steel industry Furthermore, cooperation with other steel producing countries can also create opportunities for the domestic steel industry toaccessnewmarkets,learnadvancedtechnologies,andtakeadvantageof cheaperrawmaterials