Steel plates are manufactured at SMC Tan Tao factory in HCM City. The steel sector will register growth of 11.8 per cent this year after growing 12 per cent in 2014.— VNA/VNS Photo Hoang Hai

HA NOI  (Biz Hub) — The steel sector has sought Government support to overcome the challenges it expects to encounter this year, owing to supply exceeding demand and the growing pressure exerted by steel imports.

According to the Viet Nam Steel Association, the total production capacity of the steel sector is estimated to touch 22 million tonnes, nearly double the consumption demand.

Meanwhile, Viet Nam has been unable to produce different kinds of steel and mostly relies on imports.

The association says demand will not increase much this year and has forecast that the sector will register growth of 11.8 per cent after growing by 12 per cent in 2014.

The sector's growth last year, which was partly attributed to measures adopted by the Government to liberalise the property market during recent years, has been positive, especially given the difficulties that it must encounter, industry insiders say, adding that this year will continue to be a difficult year for the sector.

In addition, the global integration process will also pose challenges for domestic steel producers as they deal with trade defence measures adopted by importers.

According to Nguyen Van Sua, deputy chairman of the association, trade defence measures, such as anti-dumping or anti-subsidy lawsuits, will lead to financial losses for domestic producers and a decline in exports.

The sector is also coping with a growing number of lawsuits. Data showed that during the 1994 to 2013 period, Vietnamese steel exports were hit by 15 anti-dumping lawsuits out of a total 52 lawsuits against the country.

Fake products, which are pervasive in the market, are also a cause for concern.

According to industry insider Pham Chi Cuong, the Government should pay greater attention to the steel industry.

He suggests that technical and trade barriers must be studied carefully, while market supervision should be enhanced to ensure healthy competition in the market.

The association says planning for the sector must be reviewed to eliminate inefficient projects and to ensure a healthy balance between supply and demand, while ensuring steel quality at the same time.

Domestic steel producers have also been urged to enhance product quality and lower prices to combat the problem of fake products in the market. — VNS