Vietnam’s steel industry went through a stormy year last year as imported products flooded into the country while both domestic consumption and export of steel declined heavily.
Unloading steel rolls at Vegetable Port in District 7 in Ho Chi Minh City. (Photo: SGGP)
Recently, cheap imported steel from China, India, Japan and Russia to Vietnam increased rapidly, causing manufacturing and trading activities of the domestic steel industry to face several difficulties. Last year, the amount of steel imported from China was more than 5 million tons, from India and Japan more than 2 million tons, worth around US$10 billion. Meanwhile, steel exports of Vietnam fell by more than 50 percent in both volume and value compared to the previous year. The domestic consumption of steel was also extremely poor. Unfortunately, although the consumption of steel weakened, steel total capacity increased, causing several difficulties for steel manufacturers.
According to enterprises, the difficulties in consumption were not only caused by the competition between domestic and imported steel, but also by the trade barriers that other countries have put up to protect domestic production due to increasing pressure from the trade war.
In addition, when banks tightened credit for the real estate sector, the progress of construction projects was slowed down, directly affecting the steel market. Those negative impacts have made the business situation of steel manufacturers to encounter several difficulties, forcing them to cut production.
Steel manufacturing in Ba Ria – Vung Tau Province. (Photo: SGGP)
The consumption and export of steel products did not post any growth, especially steel sheets and steel pipes had low consumption and high inventory. With such situation, manufacturing and trading of steel products will unlikely to recover, the downward trend even might prolong, said the representative of the Vietnam Steel Association (VSA).
In order to stabilize manufacturing and trading and create jobs for workers, according to the VSA, currently, Vietnamese steel manufacturers are in dire need of capital and interest rate cut. At the same time, it is necessary to have strong enough trade barriers to prevent low quality steel products from flooding into the country, disturbing domestic steel prices. If these burdens are removed, the steel market will possibly be able to thrive again.
More difficulties were added to Vietnam’s steel industry when the number of trade remedies investigations increased more and more. Lately, the US Department of Commerce announced the final conclusion of the investigation on anti-dumping and anti-subsidy duties of cold-rolled steel (CRS) and corrosion-resistant (CORE) steel products produced in Vietnam with input materials from South Korea and Taiwan.
Accordingly, shipments of CRS and CORE steel products exported from Vietnam which failed to prove the origin of materials were imposed tariffs of up to 456 percent. Regarding this issue, the VSA said that right after the US decided to launch investigations in August in 2018, the association cooperated with lawyers in the US and in Vietnam and export enterprises to clarify the information and asked Vietnamese steel manufacturers to cooperate with the US investigation agency. Besides, the association also proposed the Trade Remedies Authority of Vietnam under the Ministry of Industry and Trade (MoIT) to directly discuss and ask the DOC to create conditions for Vietnamese enterprises to provide information and allow Vietnamese enterprises to prove the origin of their materials by themselves to protect the legitimate interests of Vietnam’s steel industry, at the same time, collaborate with Vietnamese and US authorities to prevent illegal acts of trade fraud and tax evasion. In addition, the MoIT also participated in the hearings held by the DOC to express its opinions and had meetings with the DOC to make clear the proposal of Vietnam.
According to the VSA, after receiving the bad news, the domestic steel manufacturing industry, especially large manufacturers and exporters, has also actively built their business plans amid the context that the US probes into Vietnamese steel products. Specifically, the steel industry has shifted to use input materials from other sources as well as buy domestically-produced hot-rolled steel and build management systems to certify by themselves. This will help Vietnamese enterprises to reduce risks when exporting to the US and diversify export markets. Through this issue, the VSA recommended that Vietnamese enterprises need to improve competitiveness by applying modern and cost-saving technology, actively using domestic material sources or buying materials from other countries like Japan, Brazil, Austria and Belgium, to produce steel products for the US market to minimize risks.
Source: SGGP