Illustrative image (Source: VNA)This is the paradox of Vietnam’s steelproduction, causing a trade deficit and affecting the stability of the macroeconomy.
Vietnam’s steel industry has great potential butthe industry’s development is not synchronised. For example, hot rolled coil(HRC) and alloy steel cannot be produced domestically, therefore, Vietnam stillhas to import a large quantity of these raw materials and semi-finishedproducts, he said.
“The country’s ship-building industry isdepending entirely on imported steel,” Hoai said, adding that Vietnam has spentbillions of dollars to import steel annually, reflecting the huge domesticdemand of a developing country requiring infrastructure andundergoing rapid urbanisation.
By 2020, Vietnam will face a shortage of about15 million tonnes of crude steel and up to 20 million tonnes by 2025, Hoaisaid, adding that the country must develop steel complex projects to produceall kinds of steel to serve the country’s mechanical industry.
According to the Vietnam Steel Association(VSA), steel imports in 2016 surpassed the country’s total steel production,reaching 17.5 million tonnes, up 16.8 percent year-on-year, of which the amountof consumption reached 15.3 million tonnes, up 23.7 percent compared to 2015.
VSA vice chairman Nguyen Van Sua warned that Vietnamrisks being flooded by imported steel products, adding that strong rises inimports are hindering the growth of domestic producers.
According to the General Department of Customs’statistics, Vietnam spent 11 billion USD importing over 22 million tonnes ofsteel and iron products in 2016, an increase of 18.4 percent and 7.2 percent involume and value, respectively, against the same period in 2015.
Imported steel from China amounted to more than10 million tonnes, worth nearly 4.5 billion USD, and accounting for 50 percentof Vietnam’s imported steel. The figures represent year-on-year increases of 14percent in volume, and 7 percent in value, he said.
Japan and the Republic of Korea are the othermajor steel exporters to Vietnam, making up 20 percent of the country’s totalimported steel. Import numbers from Japan and the Republic of Korea were 2.6million tonnes and 1.8 million tonnes, worth 1.2 billion USD and 1 billion USD,respectively
Meanwhile, Vietnam exported approximately 3.9million tonnes of steel of different types to traditional ASEAN and US markets.Sua said that last year, steel export faced many difficulties due to tradedefence lawsuits filed by the US, Canada, India, Thailand and Malaysia.
"China steel massively penetrating into Vietnamis mainly produced at industrial zones and factories located in the country’scoastal region. This type of steel is competing with local steel as seatransport costs are very cheap, not to mention the convenient transportconditions,” Hoai said.
Hoai said 18 Vietnamese steel companies hadpetitioned the Government and the Ministry of Industry and Trade to extend thescope of application of trade defense tax, tightly controlling steel imports toprevent trade fraud and tax evasion.
In March 2016, the Ministry of Industry and Tradeissued a decision to apply additional tariffs on imported steel products as atemporary safeguard against inexpensive imports that were allegedly threateningthe domestic industry.
Temporary safeguard duties of 23.3 percent wereimposed on steel billets and 14.2 percent on long steel products for a maximumof 200 days. However, the foreign steel exporters avoided the tax by changingtheir product codes.-VNA
VNA
