The Hanoitimes – Local steel makers are shifting their production towards the upstream to replace the demand for imported semi-finished products.

Trade defense measures and strong growth of local steel producers are considered main factors helping local products increase sales and regain market shares from importers, mainly Chinese, according to Viet Dragon Securities Company (VDSC)’s latest report.

According to a report by the General Department of Vietnam Customs, the import of iron and steel into Vietnam has been decreasing. Vietnam imported 1.1 million tons of iron and steel every month in 2018, 12% lower than in 2017 and 27% lower than in 2016.

“This is considered a remarkable achievement for a period as the domestic steel industry has made progress regarding both scale and value chain,” stated the report.

This was due to the fact that trade defense measures were implemented to protect local suppliers.

As of end-2018, Vietnam had initiated seven investigations on imported steel including billet, long steel and galvanized sheet. In particular, the anti-dumping duties imposed on billets, long steel in 2016 and galvanized steel sheets in 2016 and 2017 supported domestic prices.

Moreover, local steel producers have grown rapidly in the last few years to meet domestic demand and to replace imported goods. During 2015-2018, construction steel, steel pipe and galvanized steel industry increased by respective 51%, 69% and 40% in output. It implied that the declining import has in fact resulted from the local supply side’s development. In addition, reducing dependence on imports brings macroeconomic benefits related to employment and trade balance.

Hot rolled steel production jumped 29 times in the period of 2015-2018, which is considered the most solid evidence of the value chain development of the local steel industry.

In particular, Vietnam’s first production of hot rolled steel, the main input in steel pipe production and galvanized steel sheet is one of the reasons for the decline in steel import demand. VDSC considered this an outstanding achievement of the domestic steel industry when all hot rolled coil had previously been imported.

Hot rolled coil imports were up to six million tons per year, more than US$3 billion in value, mostly to produce galvanized sheets and steel pipes. In the future, it is expected that steel imports will continue to decline as Vietnam moves towards full autonomy of hot rolled steel supply owing to major producers such as Formosa and Hoa Phat Group.

In the time ahead, although there is unlikely a large increase in supply, the steel industry can find growth drivers. Local steel makers are shifting their production towards the upstream to replace the demand for imported semi-finished products. VDSC expected when Formosa and Hoa Phat operate new blast furnaces at full capacity, steel imports will decline even further.
(According to Ngoc Thuy, HanoiTimes, 23 Mar 2019)

Leave a Reply