(HSV VIETNAM GROUP) – In the context of general difficulties in the construction materials industry, the steel production industry also faces many challenges. Experts believe that a more comprehensive, comprehensive and fundamental solution is needed to remove difficulties and support the steel industry to recover and develop.
Steel businesses are struggling in a difficult position
In mid-June 2024, Prime Minister Pham Minh Chinh chaired an online conference on removing difficulties and promoting production and consumption of cement, iron and steel and construction materials.
The Vietnam Steel Association (VSA) said that it is forecast that our country's finished steel production in 2024 could reach 30 million tons, an increase of 7% compared to 2023. Steel consumption in the domestic market this year is expected to increase by 6.4% compared to 2023, reaching 21.6 million tons. Estimated inventory is about 8.4 million tons.
Vietnam Steel also faces trade deficit pressure. In 2023, imports of finished steel products of all kinds to Vietnam will be about 13.33 million tons with a value of more than 10.4 billion USD, an increase of 14.07% compared to 2022. China is the country that exports the most to Vietnam with more than 62% of the total volume and more than 54% of the total value.
VSA leaders said that the biggest difficulty is that China continues to increase steel exports, Vietnamese steel manufacturers face the risk of losing the domestic market. In addition, the increase in production protectionism around the world as countries strengthen technical "barriers" and trade defenses to prevent imported steel to protect domestic production is also a significant obstacle to Vietnam's steel exports today.
Along with that, the "oversupply" of many domestic steel products and the increase in imported steel will make price competition for domestic finished steel products more fierce. The world market is unstable, international freight rates are increasing... also pose many potential risks for steel industry enterprises.
According to the Ministry of Industry and Trade, Vietnam's steel industry is currently facing many difficulties due to increased world demand, especially the decline in the domestic real estate industry, leading to a decrease in input steel demand for production in the construction industry and export; Rising raw material prices cause high production costs; Steel inventory circulating in the market is still high,...
According to the Ministry of Industry and Trade, steel is one of the products subject to the most trade defense investigations in the world. By the end of May 2024, out of a total of 252 foreign cases investigating trade remedies with Vietnam, about 30% of cases involved steel products.
The steel products under investigation are quite diverse, including galvanized steel, cold-rolled stainless steel, color-coated steel, steel pipes, steel coat hangers, steel nails, etc. These lawsuits mostly occur in Vietnam's main steel export markets such as the US, EU, Australia, Malaysia, Indonesia...
A typical example of this story is the stainless steel segment. Each year Vietnam produces more than 800,000 tons of stainless steel, but the consumer market is only about 250,000 tons, of which domestic enterprises sell more than 115,000 tons (about 45%) and imports amount to 135,000 tons (about 55%).
Stainless steel exports annually approximately 250,000 tons/year but has recently encountered difficulties due to the difficult world economy and declining overseas demand. On the other hand, Vietnamese stainless steel is also subject to high trade defense taxes in some markets such as Thailand (tax 310.74%), Malaysia (tax from 7.81%-23,845), Turkey (19.64%-25%), United States (16.24%)... Currently, some exported stainless steel products continue to be investigated in India and the European Union.
Thus, Vietnamese stainless steel enterprises are in a "difficult position" when both facing competition from imported goods with price advantages in the domestic market, while also facing difficulties in promoting exports and expanding foreign markets.
What do businesses want?
Faced with current difficulties, the Vietnam Steel Association has proposed that the Government direct relevant agencies to continue building and perfecting the system of regulations, technical management standards, quality management, and technical barriers to prevent steel products that do not meet technical safety and environmental standards from entering the Vietnamese market.
The Ministry of Industry and Trade promptly applies trade defense measures (safeguard measures, anti-dumping, anti-subsidy, trade evasion) to prevent unfair competition behavior and protect domestic production.
Mr. Pham Cong Thao, Vice President of VSA, said that the steel industry is the first industry to apply trade defense measures. This defense comes from too great pressure on imports. Recently, Vietnam has also had a number of trade defense measures such as steel billet, construction steel, stainless steel, color-coated steel... Recently, businesses have also raised the issue of applying trade defense to some new products and continuing to maintain trade defense for some products such as stainless steel.
"To protect domestic production, applying trade remedies is good in specific cases. VSA encourages the application of trade remedies to domestically produced steel products that fully meet domestic demand," Mr. Thao proposed.
This expert believes that the WTO has tools to limit unfair competition such as dumping in the market or imported steel that affects and harms the domestic steel industry. Vietnam's steel production industry is still quite young, so its competitiveness is still limited. When imported steel floods the market with dumping, it will damage Vietnam's steel industry and hinder the development of the steel industry.
According to Dr. Nguyen Thi Thu Trang, Director of the Center for WTO and Integration (VCCI), trade defense measures, especially anti-dumping, are legal tools that the domestic manufacturing industry, specifically steel production, can use to protect its legal rights against unfair competition practices such as dumping or selling products subsidized by the Government of the exporting country into Vietnam.
According to Ms. Trang, in the long term, what the state can do to support is to design a legal framework and organize an apparatus to implement trade defense tools in a reasonable, strict, transparent manner, and in accordance with the WTO so that domestic manufacturing enterprises can use them conveniently and effectively to protect their legitimate rights and interests according to regulations.
Experts say that in the steel production industry, Vietnam is behind, always losing compared to other steel producing powers. Therefore, businesses hope that the Government will have a positive, timely and harmonious response to protect steel production, which is considered a basic industry so that Vietnam can have a sustainable and healthy steel production and consumption market.
Ha Diem HSV