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| A glimpse inside a steel factory in northern Vietnam. The industry is witnessing a slow recovery, yet challenges abound (Photo: VNA) |
Vietnam’s steel industry is facing an uphill battle, with a perfect storm of challenges on the horizon. Experts from the Vietnam Steel Association (VSA) highlight a trifecta of concerns: an influx of Chinese steel exports, oversupply in the domestic market, and a maze of global trade barriers.
Dinh Quoc Thai, Secretary-General and Vice Chairman of the VSA, cautions that the industry’s recovery is fragile. While there are positive signs, production levels have not yet reached the heights of 2021, and companies are grappling with intensifying competition and soaring costs.
The root of the problem lies in China. As per Thai, Chinese producers are offloading their surplus steel into the global market due to weak domestic demand. This surge in exports has the potential to destabilize local industries and put jobs at risk.
Compounding the issue is the situation within Vietnam itself. Excess steel production and a rise in imports have resulted in cut-throat competition, forcing prices downward. This price pressure is eating into the profitability of Vietnamese manufacturers, leaving them vulnerable.
Navigating the global trade landscape only adds to the complexity. Stringent technical standards, trade defense mechanisms, and climate regulations in key markets could hinder Vietnam’s steel exports significantly. Major economies are erecting trade barriers, cloaked in the guise of environmental policies, to protect their own steel sectors. At the same time, supply chain disruptions and volatile raw material prices are pushing production costs higher, further straining the industry.
Despite these challenges, there is a silver lining. In 2024, the steel industry demonstrated resilience, posting moderate growth. Crude steel production witnessed a notable increase of 14% year-on-year, reaching 21.98 million tonnes. Domestic consumption and exports followed suit, climbing 14% to 21.41 million tonnes. Flat slab exports were the standout performer, skyrocketing by 55% to touch 2.78 million tonnes.
Finished steel production also experienced a boost, expanding by 6.1% to reach 29.44 million tonnes. Coated and pre-painted steel sheets led the charge with a remarkable 23.1% growth rate, trailed by construction steel at 10.1%, steel pipes at 3.5%, and HRC at 1.5%. However, cold-rolled coil production took a hit, declining by 19.4% during this period.
Total finished steel sales painted a positive picture, climbing 10.4% to 29.09 million tonnes. However, exports took a slight dip, falling 0.6% to 8.04 million tonnes. Notably, hot-rolled coil exports suffered a significant drop of 33.8%.
To counter these challenges and navigate the turbulent trade landscape, the VSA has urged authorities to take proactive measures. This includes closely monitoring global regulations and providing advance warnings to businesses. Key priorities are tracking US tariff policies, staying abreast of the EU’s carbon border tax developments, and ensuring Vietnam’s eligibility to import scrap metal from the EU remains intact.
Additionally, the VSA has called for stronger safeguards against Chinese steel imports, which are distorting the competitive landscape. Recommended measures include streamlining export procedures, ramping up trade promotion efforts, and bolstering legal support for anti-dumping cases. By addressing these issues, the VSA aims to protect Vietnam’s steel industry and foster a more sustainable and resilient future for local manufacturers.
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