Hoa Phat lays tracks for Vietnam's rail steel future with SMS Group

Hoa Phat lays tracks for Vietnam's rail steel future with SMS Group

Vietnam’s top steel producer Hoa Phat Group has signed a landmark agreement with Germany’s SMS Group to develop rail and structural steel, a move that will position it as the only enterprise in Southeast Asia capable of manufacturing steel rails for high-speed railways.

The €100 million deal ($108 million), signed on May 29, includes technology transfer, equipment supply, and installation. The cutting-edge line is expected to be completed within 20 months, with the first high-speed rail products to be delivered in early 2027.

"This is not just a plant, but a strategic milestone for Vietnam’s steel industry," said Bernhard Steenken, vice president of sales for APAC-MEA at SMS Group. "We are providing Hoa Phat with our most advanced flexible four-roll rail mill, capable of delivering precision and consistency that meets the strictest global railway standards."

Hoa Phat’s new facility will be equipped with a complete rolling process, from bloom reheating and multipurpose reversing mill to automatic laser defect detection, non-destructive testing, and synchronized drilling systems. All core components are manufactured in Germany and tailored to meet high-speed rail specifications in the EU, Japan, and China.

SMS Group has 150 years of metallurgical equipment expertise and has delivered 14 high-performance rail production lines worldwide, including for high-speed rail projects in the US, Europe, China, and India. The group has long-standing ties with Hoa Phat, having previously supplied technology to the group’s Dung Quat and Hai Duong integrated steel complexes.

Chairman Tran Dinh Long of Hoa Phat emphasised that the group is aligning with national infrastructure goals. "As part of our commitment to the Vietnamese government, we are investing in high-quality steel production to reduce dependency on imports for high-end steel used in railways, energy, oil and gas, and defence," he said.

With an annual design capacity of 15 million tonnes by the end of 2025, mainly hot-rolled coil and special steel, Hoa Phat remains Southeast Asia’s largest steelmaker and the domestic market leader. Its exports now reach over 40 countries.

The upcoming facility is expected to yield a range of speciality steel products previously unavailable in Vietnam, such as high-speed rail steel, urban rail tracks, crane rails, and structural steel forms such as U, I, H, and V beams. These products will support critical national railway projects and unlock export potential in advanced infrastructure markets.

One key advantage lies in Hoa Phat’s use of low-impurity iron ore, which allows production of rails up to 100 meters in length with exceptional straightness and hardness. Each rail is measured by laser for geometry and scanned by ultrasound to eliminate internal defects before distribution.

Globally, only a handful of steel giants, including Voestalpine (Austria), JFE (Japan), Baosteel (China), and JSW Steel (Italy) possess the technology and capacity to manufacture high-speed rail steel. Hoa Phat’s entry into this elite circle marks a critical turning point for Vietnam’s heavy industry.

"This project is a legacy" said Steenken. "It is not just about a new production line; it’s about establishing Vietnam as a force in global rail infrastructure supply."

VIR