Is Vietnam on its Way to become Self-Sufficient Steel Producing Nation?

After the imposition of trade barriers on steel imports by various countries, Vietnam (due to absence of any trade restriction) has become one of the favourite steel export destination for countries like China, Russia, South Korea, and India.

Vietnam is a net importer of steel especially for HRC and alloy steel as these products are not produced domestically. This is due to its incomplete value chain and unsynchronised development despite having good potential. In 2016, Vietnam imported 18.3 MnT of steel, with alloy steel accounting for 27% in total imports, HRC adding up to 25%and steel scrap amounting to 17%.

However, according to market sources, the country is making strong efforts to reduce its dependency on imports.

Vietnam has two major steel producers, Hoa Phat Steel and Formosa Ha Tinh
Steel Corporation (FHS). It has been reported that Hao Phat Steel has produced record volumes of 3 MnT of finished steel products this year which is 25% increase against previous year's output.Of this, construction steel accounted for 2.2 MnT while steel pipes contributed to 600,000 tonnes and the remaining was galvanised steel.In the domestic market, Hao Phat continued to lead the market with percentage share of 24%.

Now it is being heard that both the steel giants plan to start their in-house production of HRC in coming years. While FHS is all set to start its second blast furnace in Mar'18 adding up its total capacity to 7 MnT, Hao Phat will come up with its blast furnace of 3.5 MnT capacity by 2019.

In order to promote domestic steel production and reduce dependence on imports, country's domestic players are persuading government to impose trade barriers on imports especially from China. However, no formal action has been taken by the government yet.

In first 11 months of 2017 (from Jan-Nov) country's iron and steel imports stood at around 14 MnT with highest imports of 6.54 MnT coming from China followed by Japan (2.09 MnT) and South Korea (1.58 MnT).

From 2013-2016, the volume of country's steel production grew at an average of 22% whereas its consumption grew at 26%. The country's domestic steel demand is expected to increase further in the coming years amid increased spending by the government for infrastructure development. As per the reports,although Vietnam will increase its domestic steel production, it will still run short of 15 MnT steel by 2020.

Source: SteelMint Research