Rising Imports of HRC and the Struggle of Vietnamese Steel
[tintuc]
Vietnam is currently facing a significant influx of cheap imported steel, raising concerns among domestic producers. Experts argue that with imports reaching 151% of domestic production, timely and appropriate defensive measures are necessary to prevent market loss.
Market Threats
According to customs data, Vietnam imported 886,000 tons of hot-rolled coil (HRC) in June alone, equating to 151% of local production, with 77% coming from China. Over the first half of the year, HRC imports reached nearly 6 million tons, a 32% increase compared to the same period in 2023. This import volume is 173% of domestic production, with China accounting for 74%, followed by South Korea, India, and Japan.
The import value of HRC in the first half of the year was $3.46 billion, with China alone accounting for $2.5 billion. The average price of HRC imports from China was $560/ton, significantly lower than domestic offers by about $15-20/ton and lower than imports from other countries by $45-108/ton.
The Vietnam Steel Association (VSA) reports that the annual demand for HRC in Vietnam is around 12-13 million tons, while the current domestic production capacity is about 9 million tons. The surge in HRC imports, at times nearly double local production, has caused domestic market share to shift towards imported products. The market share of local producers like Hoa Phat and Formosa has dropped from 42% in 2021 to 30% in 2023, continuing to decline.
This influx of cheaper imports has forced domestic producers to operate below full capacity due to fierce competition from low-cost imports, potentially involving dumping. In 2023, domestic HRC production was only 6.7 million tons, or 79% of designed capacity, a drop from 86% in 2021. Meanwhile, HRC imports reached 9.6 million tons in 2023, 1.5 times domestic production.
VSA has flagged the continued strong increase in HRC imports in the first half of 2024, 1.7 times local production, as a significant concern.
Defensive Measures
Given the surge in cheap HRC imports, stakeholders and experts suggest that relevant authorities should continue to develop and refine technical regulations, quality management standards, and appropriate defensive measures. These actions are crucial to prevent the influx of substandard steel products that fail to meet safety and environmental standards.
VSA Chairman Nghiêm Xuân Đa has urged the Ministry of Industry and Trade to expedite the development and submission of the Vietnam Steel Industry Development Strategy to 2030, with a vision to 2050, linked with special policies for green and sustainable growth in the steel industry. Additionally, there is a call to guide and support steel exporters in effectively responding to trade defense cases abroad.
Recently, the Ministry of Finance agreed with VSA on the need to apply appropriate trade defense measures to protect domestic manufacturers. This includes adjusting import-export taxes to gradually increase, with lower input taxes and higher taxes on more refined products, creating legal barriers to protect local producers.
Nguyễn Thị Thu Trang, Director of the WTO and Integration Center (VCCI), stated that historically, all trade defense cases concerning steel in Vietnam have resulted in the application of trade defense measures. So far, there have been no objections from WTO members regarding Vietnam's compliance with WTO requirements in these cases.
Reports from the center indicate that, in Vietnam, 12 out of 28 trade defense cases have involved steel products, accounting for approximately 46% of all trade defense cases. Conversely, other countries have initiated 73 trade defense cases against Vietnamese steel exports. This shows the widespread use of trade defense measures to protect domestic markets globally.
Trang suggested setting up international standard technical barriers to prevent the import of substandard products. Additionally, she recommended establishing a quality inspection process for imported steel to ensure compliance with Vietnamese standards.
The Ministry of Industry and Trade is currently reviewing domestic enterprises' requests to investigate anti-dumping duties on HRC imports from China and India. The assessment period is 45 days from the official receipt of the complete application (June 14, 2024).
The Ministry has emphasized the importance of trade defense measures to restore a fair competitive environment for domestic industries. Past instances have shown that imports with signs of dumping or subsidies have severely impacted several domestic industries, especially steel.
The Ministry is also preparing to submit the Vietnam Steel Industry Development Strategy to 2030, with a vision to 2050, to the Prime Minister. Concurrently, it is finalizing a draft to propose the National Assembly pass a law on key industrial development. The long-term goal is to develop the steel industry into a national foundational industry, meeting domestic demands and rapidly increasing exports.
[/tintuc]
Vietnam is currently facing a significant influx of cheap imported steel, raising concerns among domestic producers. Experts argue that with imports reaching 151% of domestic production, timely and appropriate defensive measures are necessary to prevent market loss.
Market Threats
According to customs data, Vietnam imported 886,000 tons of hot-rolled coil (HRC) in June alone, equating to 151% of local production, with 77% coming from China. Over the first half of the year, HRC imports reached nearly 6 million tons, a 32% increase compared to the same period in 2023. This import volume is 173% of domestic production, with China accounting for 74%, followed by South Korea, India, and Japan.
The import value of HRC in the first half of the year was $3.46 billion, with China alone accounting for $2.5 billion. The average price of HRC imports from China was $560/ton, significantly lower than domestic offers by about $15-20/ton and lower than imports from other countries by $45-108/ton.
The Vietnam Steel Association (VSA) reports that the annual demand for HRC in Vietnam is around 12-13 million tons, while the current domestic production capacity is about 9 million tons. The surge in HRC imports, at times nearly double local production, has caused domestic market share to shift towards imported products. The market share of local producers like Hoa Phat and Formosa has dropped from 42% in 2021 to 30% in 2023, continuing to decline.
This influx of cheaper imports has forced domestic producers to operate below full capacity due to fierce competition from low-cost imports, potentially involving dumping. In 2023, domestic HRC production was only 6.7 million tons, or 79% of designed capacity, a drop from 86% in 2021. Meanwhile, HRC imports reached 9.6 million tons in 2023, 1.5 times domestic production.
VSA has flagged the continued strong increase in HRC imports in the first half of 2024, 1.7 times local production, as a significant concern.
Defensive Measures
Given the surge in cheap HRC imports, stakeholders and experts suggest that relevant authorities should continue to develop and refine technical regulations, quality management standards, and appropriate defensive measures. These actions are crucial to prevent the influx of substandard steel products that fail to meet safety and environmental standards.
VSA Chairman Nghiêm Xuân Đa has urged the Ministry of Industry and Trade to expedite the development and submission of the Vietnam Steel Industry Development Strategy to 2030, with a vision to 2050, linked with special policies for green and sustainable growth in the steel industry. Additionally, there is a call to guide and support steel exporters in effectively responding to trade defense cases abroad.
Recently, the Ministry of Finance agreed with VSA on the need to apply appropriate trade defense measures to protect domestic manufacturers. This includes adjusting import-export taxes to gradually increase, with lower input taxes and higher taxes on more refined products, creating legal barriers to protect local producers.
Nguyễn Thị Thu Trang, Director of the WTO and Integration Center (VCCI), stated that historically, all trade defense cases concerning steel in Vietnam have resulted in the application of trade defense measures. So far, there have been no objections from WTO members regarding Vietnam's compliance with WTO requirements in these cases.
Reports from the center indicate that, in Vietnam, 12 out of 28 trade defense cases have involved steel products, accounting for approximately 46% of all trade defense cases. Conversely, other countries have initiated 73 trade defense cases against Vietnamese steel exports. This shows the widespread use of trade defense measures to protect domestic markets globally.
Trang suggested setting up international standard technical barriers to prevent the import of substandard products. Additionally, she recommended establishing a quality inspection process for imported steel to ensure compliance with Vietnamese standards.
The Ministry of Industry and Trade is currently reviewing domestic enterprises' requests to investigate anti-dumping duties on HRC imports from China and India. The assessment period is 45 days from the official receipt of the complete application (June 14, 2024).
The Ministry has emphasized the importance of trade defense measures to restore a fair competitive environment for domestic industries. Past instances have shown that imports with signs of dumping or subsidies have severely impacted several domestic industries, especially steel.
The Ministry is also preparing to submit the Vietnam Steel Industry Development Strategy to 2030, with a vision to 2050, to the Prime Minister. Concurrently, it is finalizing a draft to propose the National Assembly pass a law on key industrial development. The long-term goal is to develop the steel industry into a national foundational industry, meeting domestic demands and rapidly increasing exports.
