Viet Nam’s steel industry will be able to produce enough hot-rolled steel in 2018 to meet local demand. Before, the nation had to import millions of tonnes of hot-rolled steel products every year.
Deputy chairman of the Viet Nam Steel Association Nguyen Van Sua tells Thoi bao Kinh doanh (Business Times) newspaper about steel production this year and origins of Vietnamese steel.
How did the domestic steel industry develop in 2017? And what do you predict for its growth in 2018?
The domestic steel market has grown in production and consumption over the past few years, especially the period 2016-17. Most steel enterprises have achieved high profits from steel production and business in 2017.
In 2017, the steel industry reached a year-on-year increase of 23 per cent in production and 20 per cent in consumption while exports of steel reached 4.7 million tonnes, a surge of 28 per cent against 2016.
The strong growth was due to high demand for steel as the domestic economy developed, including construction of infrastructure, bridges, harbors, airports, urban areas and housing.
The steel industry will continue the development because many projects have to be completed and put into operation this year.
Meanwhile, the Government will enhance disbursement for many projects with public investment to finish the projects, leading to higher demand for steel products.
However, to obtain those advantages, the local steel producers must improve competitiveness of their products by investing in reform of production technology, a skilled workforce and use of modern management methods.
Viet Nam has joined many free trade agreements (FTAs) so there are opportunities and challenges for the local steel industry. What does the industry do to maximise opportunities?
The FTAs aim to liberalise trade and will create opportunities and challenges for the local steel industry.
Therefore, we have to understand international trade very well to take suitable actions.
I think that Viet Nam’s steel industry in the future should build large steel enterprises to produce steel products with the ability to compete with foreign ones.
Those enterprises must have large production scale, high technology and good management ability to produce 7-10 million tonnes of steel per year.
Now, the local steel producers have had difficulties in capital, technology and equipment.
Over past years, China has cut its output of steel. How has this action affected Viet Nam’s steel industry, especially given that the US Department of Commerce has suspected 90 per cent of the steel exports from Viet Nam to the US are produced in China?
China’s steel production capacity is too high and the steel industry has overheated development over the domestic demand. The reduction will ensure the effectiveness of the steel industry in China and that will partly affect Viet Nam.
The media has recently reported that 90 per cent of Viet Nam’s steel shipped to the US is produced in China.
I believe it is inaccurate because a very small amount of Viet Nam’s steel exports were produced in China.
The reality will be proven soon this year when Viet Nam begins producing hot rolled steel, ensuring the origin of steel products produced in Viet Nam.
Taxes for steel imports from China have fallen to zero per cent under the ASEAN-China FTA effective in July 2005. Has that increased China’s steel exports to Viet Nam ?
Viet Nam’s steel industry needs to improve the competitiveness of its products for competing with Chinese steel and Viet Nam needs to use trade remedies for protecting its domestic production, which the US and Europe are using quite effectively.
In 2017, Viẹt Nam also used trade remedies effectively. Pig iron imported from China to Viet Nam in 2015 was two million tonnes. Since 2016, Viet Nam has had a trade remedy for the pig iron from China so the imports are reduced to 1.2 million tonnes in 2016 and a few hundred thousands of tonnes in 2017.
Meanwhile, in 2016, Viet Nam imported 1.8 million tonnes of galvanised steel sheet. After the imposition of the trade remedy tax, the import of galvanised steel sheets decreased to 1.2 million tonnes last year.
China has closed the induction furnace for fear of environmental pollution, while the steel industry of Viet Nam has still used this a lot. To avoid a situation like China, what should Viet Nam do?
Currently, Viet Nam has not planned to close the induction furnace because the capacity of the electric furnace has not met the local demand so the induction furnace has still had a positive contribution.
However, investors should pay attention to the long-term vision to not put large investment in developing induction furnaces because it may be limited in the future because of its negative effects on the environment, then the investor will suffer great damage. — VNS