The Vietnamese steel industry is at a critical crossroads. Despite expectations of 7-8% growth in domestic steel manufacturing in 2024, imported steel is flooding the market at an alarming rate, leading to supply likely exceeding demand and putting external pressure on domestic producers.

According to the latest data from the General Department of Vietnam Customs, in April 2024, Vietnam imported a staggering 890,000 tons of hot-rolled steel, exceeding domestic production by 1.5 times. More notably, hot-rolled steel imports from China increased by 71%. Looking at the cumulative data for the first four months of 2024, Vietnam’s total hot-rolled steel imports surged to 3.93 million tons, a significant 32% increase compared to the same period in 2023, equivalent to 159% of domestic hot-rolled steel production. Of this, imports from China reached 290 tons, accounting for 73% of total imports, more than doubling from the previous year. This marks the first time in Vietnam’s history that hot-rolled steel imports have exceeded annual domestic production.

This massive wave of imports has dealt a significant blow to domestic steel producers in Vietnam. Nghiem Xuan Da, Chairman of the Vietnam Steel Association, stated in an interview: “Currently, our major manufacturing industry is facing a position of excessive pursuit. The surge in imports has further exacerbated the situation.” Data shows that the market share of major domestic hot-rolled steel manufacturers is expected to drop from 45% in 2021 to 30% in 2023. Industry experts predict that if this trend continues, import signals may further strengthen in 2024, undoubtedly having a significant impact on domestic high-quality steel production.

Pham Van Tai, Chairman of the Vietnam Association of Supporting Industries, points out that while Vietnam has faced technological and financial barriers in producing hot-rolled steel, the situation has improved. He states, “Due to the massive investment capital requirements and high technological demands, Vietnam has been unable to produce hot-rolled steel. However, with investments from Taiwan’s Formosa Group and Vietnam’s Hoa Phat Group, we have begun to make breakthroughs in this area.”

Despite facing challenges, Vietnam still holds a place in the global steel production landscape. Currently, Vietnam ranks 13th in the world for some crude steel production and leads in the South Asian region. However, the Vietnamese steel industry still faces long-term challenges. Specifically, Vietnam still needs to import large quantities of rolled steel, accounting for over 50% of total imports, mainly hot-rolled steel. Additionally, Vietnam needs to import shaped steel and some metal-coated and color-coated products, which account for about 20-25% of domestic consumption demand.

In the face of these severe circumstances, the Vietnamese government and steel industry are actively taking measures to address the challenges:

The Ministry of Industry and Trade is expediting the development of the “Steel Industry Development Strategy to 2023 and Vision for Steel Industry Development to 2050,” which will be submitted to the Prime Minister as soon as possible. This strategy aims to provide a clear roadmap for the long-term development of Vietnam’s steel industry.

Simultaneously, the Ministry is finalizing the draft “Law on Key Industrial Development,” planning to report to the government before submitting it to the National Assembly for approval. The long-term goal of this law is to nurture the steel industry into a national foundation industry capable of meeting domestic demand and driving rapid export growth.

The Vietnamese steel industry has proposed to relevant institutions to continue developing and improving technical management, quality management technical barriers, and standard systems. These measures aim to prevent steel products that do not meet safety and environmental standards from entering the Vietnamese market.

The Ministry of Industry and Trade is considering timely trade facilitation measures to prevent unfair competition and protect the interests of domestic manufacturers.

In response to the issue of massive import inflows, the Ministry of Industry and Trade has taken specific actions. The ministry issued Decision No. 1535/QĐ-BCT, initiating an anti-dumping investigation on galvanized carbon and alloy steel sheets and coils originating from China and South Korea, in response to applications from Vietnamese enterprises.

Furthermore, on June 14, 2024, the Vietnam Trade Remedies Authority announced that the application for an anti-dumping investigation on hot-rolled steel from India and China was complete and complied with trade remedy laws. This suggests that more trade protection measures may be forthcoming.

The Vietnam Steel Association and related enterprises have called on the government to take stronger measures to protect domestic industries. They believe that if timely and reasonable measures are not taken to protect and support the domestic steel manufacturing industry, the Vietnamese market may be monopolized by foreign manufacturers.

However, this protectionism has sparked some controversy. Some economists warn that excessive trade protection measures could harm Vietnam’s competitiveness in international markets and potentially lead to retaliatory measures from other countries.

In summary:

• The Vietnamese steel industry is at a crucial turning point, facing the dual challenges of import pressure and domestic industry protection.
• The Vietnamese government is seeking to break through difficulties through multiple approaches, including formulating development strategies, improving laws and regulations, and implementing trade protection measures.
• The key to future development lies in balancing domestic industry protection with international trade relations to achieve sustainable growth.

We will continue to monitor developments in the Vietnamese steel industry. If you have any questions about the content of this article or need more in-depth analysis of the Vietnamese steel industry, please contact our senior consultant Jaycy. Our professional team will provide you with the latest and most comprehensive industry information and expert insights.