Steel industry navigating global challenges

Steel industry navigating global challenges

Vietnam's steel industry is seeking opportunities to strengthen its manufacturing and exports while facing intense competition from low-cost imported steel and global trade protection measures.

In response to the growing pressures, the Ministry of Industry and Trade is set to impose a temporary anti-dumping tax from March 8 on imported hot-rolled steel from China, known as Hardness Rockwell C Scale (HRC) steel, with rates ranging from around 19.4 per cent to 27.8 per cent.

Photo: baodautu.vn

The move was prompted by requests from Hoa Phat Dung Quat Steel JSC and Formosa Ha Tinh Steel Corporation to safeguard domestic production.

According to customs data, HRC steel imports surged by over 33 per cent in 2024, reaching 12.6 million tonnes - far exceeding domestic demand, which stands at approximately 11-12 million tonnes annually, and local production output, which is around 8.5 million tonnes.

The anti-dumping tax, which will be in effect for 120 days, aims to curb the influx of imports and provide a positive signal for domestic steel manufacturers. The tax rate significantly exceeds the typical price difference between locally produced HRC steel and Chinese imports, which ranges from $15-45 per tonne.

Vietnam experienced a record year for steel imports last year, totalling almost $19.1 billion, with supplies from China accounting for $12 billion- a 32 per cent jump on-year.

The surge in cheap Chinese steel has significantly eroded the market share of domestic companies, dropping from 42 per cent in 2021 to 30 per cent in 2023, with imported HRC steel reaching 9.6 million tonnes that year- 1.5 times the domestic production volume.

This trend has intensified competitive pressure and triggered a wave of global trade protection measures, with 14 countries launching investigations and imposing anti-dumping and countervailing duties on HRC steel from China and India.

Major steel exporters such as Hoa Sen Group, Nam Kim Steel JSC, and Ton Dong A Corporation are struggling to maintain competitive pricing as they face fierce competition from steel producers in China, India, Mexico, Canada, and Brazil -countries that can adjust prices to retain market share.

According to Vy Tien Toan, CEO of Trung Tin Kim Steel and Trading Co., Ltd., the anti-dumping tax on Chinese HRC steel may provide opportunities for domestic producers like Hoa Phat to increase sales targeting major export markets like the US.

"Additionally, as US tariffs remain high compared to markets like the EU, Canada, and Mexico, Vietnamese businesses can expand their market share in the US in the long term," said Toan.

Vietnam’s steel industry is also facing a paradox in which the local demand of approximately 11-12 million tonnes per year is lower than import volume, leading to a heavy reliance on foreign supplies. This diminishes domestic market share and poses long-term stability challenges for the industry.

To address these issues, local firms are restructuring, enhancing management capabilities, and modernising technology to reduce production costs.

The industry is also shifting towards producing higher-value-added products rather than relying solely on traditional raw materials. Strengthening value chain linkages and improving logistics systems, which are the key factors helping businesses control raw material supply and swiftly adapt to policy changes in the global market, is also a priority.

Experts believe that this transformation will alleviate competitive pressures from imports and enhance the competitiveness of Vietnam’s steel industry on the global market.

With the country’s participation in free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and EVFTA, local steel industry has the opportunity to expand into markets like the EU, ASEAN, Japan, and South Korea, reducing its dependence on the US market, which is subject to high tariffs.

At the same time, local firms are actively researching HS Codes- internationally standardised classification codes used in global trade to categorise products and determine applicable tariffs and trade regulations- to identify product categories that face lower import duties or trade restrictions.

By strategically selecting and adapting their product offerings to fit these classifications, businesses can develop specialised, high-value-added products that meet the stringent requirements of international markets while minimising tariff-related costs.

These strategic measures not only contribute to mitigating risks from global political fluctuations, but also strengthen the competitiveness of the domestic steel industry on the global stage.

VIR