Vietnamese steel makers regain market share

08:36 | 27/01/2017 Industry

(VEN) - Vietnamese steel businesses saw significant improvement in production and sales despite many domestic and foreign rivals. The growth in 2016 is a good base to prepare a sustainable development plan for the steel industry.  

vietnamese steel makers regain market share
The domestic steel market grew steadily in 2016

Advantages and difficulties

Decision 862/QD-BCT issued in 2016 by the Ministry of Industry and Trade to impose temporary tariffs on imported steel billets and steel pipes has provided a catalyst for domestic steel production and sales.

Shortly after Decision 862/QD-BCT took effect, Vietnamese steel businesses’ production and sales skyrocketed in the first quarter of 2016. Vietnam Steel Association (VSA) member manufacturers produced almost 374,000 tonnes of steel pipe in the first quarter of 2016, up 35.4 percent from the same time in 2015. Also in the first quarter of 2016, construction steel sales in the domestic market totaled two million tonnes, up 56 percent from the same period of the previous year.

The application of temporary safeguard measures has helped stem low-price steel and steel billet imports, contributing to creating a fair business environment for domestic steel makers, said VSA Deputy Chairman Nguyen Van Sua. In the first half of 2016, most of domestic enterprises obtained impressive achievements. The Dana-Y Steel Joint Stock Company earned a profit five times that in the same time of 2015, while Hoa Phat Steel earned an after-tax profit of VND3 trillion.

Domestic steel manufacturers have maintained their growth momentum. A VSA report showed that in the first 11 months of 2016, the total steel output rose more than 19 percent over the same period in 2015 to reach 15.5 million tonnes, with an increase in revenue of more than 27 percent, and steel exports hit 2.46 million tonnes, up more than 46 percent. However, in 2016, domestic steel companies encountered many difficulties when facing anti-dumping, anti-subsidy and tax evasion lawsuits in foreign markets.

For example, in September 2016, the US Department of Commerce (DOC) received antidumping (AD) and countervailing duty (CVD) petitions on carbon-quality steel and cold rolled steel imports from Vietnam. So far, Vietnamese steel businesses have faced 11 lawsuits in the US, including five anti-dumping cases, three anti-subsidy cases and three tax evasion cases. Furthermore, the Australian Anti-Dumping Commission has decided to probe steel alloy imports from Vietnam, India and Malaysia in terms of anti-dumping and anti-subsidy.

Although the US and Australia are not main markets for Vietnamese steel exports, on-going and future lawsuits from these countries would have a big negative impact on Vietnamese steel brands.

The Competition Management Department (Ministry of Industry and Trade) and the VSA have been actively assisting domestic steel enterprises in clarifying quality and origin profiles of Vietnamese steel products to prove that Vietnamese steel products relate to no tax evasion, antidumping and governmental subsidy.

Promising future

VSA Chairman Ho Nghia Dung said that to make the steel industry develop comprehensively, the protection by technical, trade and safeguard measures are only a short-term solution, but the most important is to improve competitiveness and product quality of domestic enterprises. Enterprises should be aware of the market’s imbalance to limit investment in steel segments with over supply of product. Particularly, they must follow the approved plans set by the government.

Thu Ha