An industry insider said that steel businesses in Vietnam are struggling to survive with inventories piling up and no recovery in sight given the real estate situation.

Mr Nguyen Tien Nghi vice chairman of the Vietnam Steel Association said that many businesses may not have filed for bankruptcy but are clinically dead.

Mr Nghi said that unsold stocks were 300,000 tonne in 2012, 380,000 tonne at their peak, 50% more than the normal production levels.

According to figures from the association, steel consumption in February fell by more than 40% from the previous month, forcing many companies to reduce output to a fourth of January levels or even stop production.

Mr Nghi said that the most distressed firms are new ones that have yet to build themselves a brand name, and they cannot sell even at cut rate prices.

He said at the root of the problem lies real-estate market that, the main steel consumer.

Property investors said that 2012 was their worst year, with a 17.5% increase in excess supply to more than USD 3 billion of inventory.

The association has encouraged members to look overseas, but that would not be easy either since the Vietnamese steel industry is not as developed as that of other countries, and thus not competitive.

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