(HSV VIETNAM GROUP) – The domestic steel production industry is forecast to continue to grow by 7-8% this year. This is a positive sign, however, the rapid increase in imported steel products from abroad is causing supply to far exceed demand, with foreign steel even surpassing domestic steel.
According to a report by the Vietnam Steel Association (VSA), the total production capacity of domestic steel enterprises currently reaches about 23 million tons of crude steel (square and flat billets). The production capacity of finished steel products including construction steel, hot-rolled and cold-rolled steel coils, galvanized steel sheets, and steel pipes reaches about 38.6 million tons/year.
From worries about competition on the "home field"
With the current recovery momentum, it is forecast that finished steel production this year could reach 30 million tons, an increase of 7% compared to 2023. However, this recovery is uncertain and steel businesses still face many difficulties.
VSA Association, said that currently steel production is in a state of oversupply, along with increased imports, making price competition for domestic steel products more fierce.
Citing data from the General Department of Customs, it can be seen that the import value of iron and steel of all kinds in May reached 1.72 billion USD, an increase of 14.9%, equivalent to an increase of 223 million USD compared to the previous month. Accumulated in the first 5 months of 2024, the whole country has imported 7.48 billion USD of iron and steel of all kinds, an increase of 26.3%, equivalent to an increase of 1.56 billion USD compared to the same period in 2023 and approximately the import level of 5 months/2022.
According to the General Department of Customs, the import value of iron and steel of all kinds in May reached 1.72 billion USD, an increase of 14.9%, equivalent to an increase of 223 million USD compared to the previous month.
Vietnam mainly imports iron and steel of all kinds from main markets: China reached 4.77 billion USD, up 53.8% over the same period in 2023 and up 37.9% over the same period in 2022; Korea reached 735 million USD, an increase of 4.6% over the same period in 2023. The large amount of imported steel, especially steel originating from China, is causing many difficulties for the domestic production industry.
With such an import volume, the Vietnam Steel Association said that the production of two domestic hot-rolled steel enterprises, Formosa and Hoa Phat, has declined, reaching only 73% of design capacity compared to 86% in 2021 due to unfair competition with imported goods sold below cost. Regarding price, import prices have now plummeted from 613 USD at the beginning of 2023 to 541 USD at the end of 2023.
Commenting on the above situation, Mr. Phan Dang Tuat, Chairman of the Vietnam Supporting Industry Association, said that in the past, Vietnam could not make hot rolled steel because the investment capital was too large and the technology required was very high, so of course it had to be imported. However, since Formosa Ha Tinh and Hoa Phat invested in the production of this product, we have been able to produce it and the product is highly competitive, but in the market, this product line is still flooding in in large quantities. Especially recently, there are signs of selling below cost, we need to consider, because it will have a great impact on domestic production and lose the market.
A sharp increase in imports and low selling prices have caused the domestic sales market share of the two domestic HRC manufacturers to decrease sharply from 45% in 2021 to 30% in 2023. It is expected that this year's import momentum will continue to increase sharply, which will affect efforts to self-manage high-quality steel production.
Although Vietnam's steel production currently ranks 13th in the world and tops the ASEAN region. However, the steel industry still has long-term bottlenecks. Vietnam continues to import rolled steel, accounting for over 50% of total import turnover; of which, mainly hot rolled steel. In addition, Vietnam still imports shaped steel, some metal-plated and color-coated products, accounting for about 20-25% of domestic consumption demand.
There is an urgent need for a defense mechanism
Faced with this reality, the Vietnam Steel Association has proposed to relevant agencies to continue building and perfecting the system of regulations, standards for technical management, quality management, and technical barriers. From there, prevent steel products that do not meet technical safety and environmental standards from entering the Vietnamese market.
Mr. Nguyen Huu Truong Hung - representative of the Trade Defense Agency (Ministry of Industry and Trade) said that in the near future, the steel industry will continue to face many difficulties in competing with steel imported from China due to small production scale and high production costs compared to large Chinese enterprises. At the same time, there are many domestic steel products that still have to import raw materials from China.
Recently, the Ministry of Industry and Trade promptly applied trade defense measures to prevent unfair competition and protect domestic production. The Ministry also accelerated the progress of building and submitting the Vietnam Steel Industry Development Strategy to 2030, vision to 2050, associated with specific policies for green and sustainable growth of the steel industry.
While waiting for the Steel Industry Development Strategy, it is necessary to apply investment management measures in large-scale steel projects to control the balance of supply and demand, avoid wasting resources and land, protect the environment, reduce greenhouse gas emissions, and promote green production and consumption.
Recently, a representative of the Ministry of Finance also agreed with the opinion of the Vietnam Steel Association on the need to apply appropriate trade defense measures to protect domestic manufacturing enterprises.
Accordingly, for import and export taxes adjusted gradually, the input level is low, while for more refined products, higher taxes will be imposed, contributing to creating legal barriers to protect domestic manufacturing enterprises.
Currently, the Ministry of Industry and Trade is developing and is expected to soon submit to the Prime Minister for promulgation the Vietnam Steel Industry Development Strategy to 2030, with a vision to 2050. The Ministry is also completing a draft to report to the Government to submit to the National Assembly for promulgation of the Law on Key Industrial Development.
Accordingly, the long-term goal is to develop the steel industry into a national foundation industry, meeting domestic demand and rapidly increasing exports. Regarding the issue of massively imported steel entering the market, the Ministry of Industry and Trade issued Decision No. 1535/QD-BCT on investigating and applying anti-dumping measures on some galvanized steel products originating from China and Korea.
Ha Diem HSV