How did Vietnam steel mills' raw material mix change in CY22?

• Previous BF-route expansions warrant higher iron ore usage
  
  
• Many future projects' focus is on EAFs
  
  
• Scrap usage may rise, keeping eye on COP26 targets
  
  

Morning Brief: Vietnam's crude steel production recorded a drop of 13% y-o-y in calendar year 2022 (CY22) to nearly 20 million tonnes (mnt) against 23 mnt in CY21. As a result, data maintained with SteelMint shows that all key raw materials showed a slight y-o-y drop or remained more or less stable.

Production of finished steel last year touched 29.3 mnt, down 12% y-o-y, of which hot rolled steel products reached about 18 mnt, down 7%.

Consumption reached 22 mnt, up a slight 0.9% y-o-y.

Raw material mix change in 2022

Iron ore: However, it is noted that since previous years' expansions plans mainly rode the blast furnace (BF) route, consumption of iron ore was also on the higher side, at 21 mnt in CY21. This dropped to 18 mnt in CY22. For instance, Hoa Phat, a leading Vietnamese mill, planned to add two new blast furnaces that will form the centre of the future Hoa Phat Dung Quat Steel Complex II.

Ferrous scrap: Consumption of ferrous scrap dipped marginally to 9.50 mnt in 2022 against 10.50 mnt in 2021. In a spin-off of the lower crude steel production, scrap imports, which comprised 3.66 mnt in CY22, also showed a sharp drop from almost 6 mnt in 2021.

Pig iron: With crude steel output down, naturally pig iron production also dipped last calendar to 13 mnt from 15 mnt in 2021.

Charge mix in BFs: The charge mix in blast furnaces remained more or less stable y-o-y since most of the production is currently driven by this route. For instance, lumps and sinter rose a tad to 20% and 70% respectively while pellets usage dropped to 9% in CY22. In 2021, the share was 19%, 70% and 11% respectively.

New projects' stress is on EAF route

A considerable portion of the newer expansions will, however, be through the electric arc furnace (EAF) route, and this would necessitate higher usage of ferrous scrap.

• Quang Tri Iron & Steel Projects: This expansion from Vina Roma in Quang Tri province would have a capacity of about 4.5 mnt per annum.
  
  
• DST Nghi Son Iron and Steel Joint Stock Company: Plans under way for 980,000 t/year of hot-rolled steel coils via EAF technology, 30,000 t of structural steel, and 300,000 t of steel pipes, boxes, and galvanized per annum.
  
  
• Long Son Integrated Steel Mill: The project is divided into 3 investment phases, with a capacity of 5.4 mnt/year.
  
  
• Xuan Thien green steel complex project: This will include 1) the Xuan Thien Nam Dinh green steel plant, with a capacity of 7.5 mnt/year; 2) Xuan Thien Nghia Hung green steel project, with a capacity of 2 mnt/year.
  
  

Outlook

The selected technology for many of the plants is EAF (scrap and sponge iron) instead of BF-BOF. The ultimate goal is to use hydrogen and wind power to produce green steel, in compliance with the commitment of the Vietnam government at COP26.

Vietnam's crude steel production is expected to grow 2-3% in CY2023, propelled by a likely GDP growth of 6.47-6.83%. However, with a pronounced focus on the EAF route, Vietnam's scrap usage is slated to increase.

Looking at 2030, the country expects the per capita steel consumption to grow to around 300/kg from the current 240/kg, which will push up steel demand to around 30-32 mnt in this period. Demand will be driven mainly by sectors like automotive, shipbuilding, manufacturing, and electrical appliances.

Mysteel is organizing Asia Steel Forum - 2023. It will be a three-day event scheduled on 20-22 Sept'23 in Ho Chi Minh City, Vietnam. The event is co-hosted by SteelMint, Japan Metal Daily and Steel Daily. It is an ideal platform for steel manufacturers, global trading firms, scrap suppliers, equipment suppliers, and technology providers to network under a single roof. Hope to see you there. Register fast.