Steel imports, primarily from China, have been flooding into Vietnam, putting immense pressure on domestic steel producers.

According to the General Department of Customs, in the first two months of 2024, nearly 2.65 million tons of iron and steel were imported into Vietnam, nearly double the amount from the same period last year. Of this, steel from China accounted for 1.8 million tons, representing a threefold increase in volume and a 2.4-fold increase in value compared to the previous year.

For hot-rolled coil (HRC) steel alone, Vietnam imported 1.89 million tons in the first two months of 2024, with an import value exceeding $1 billion. Chinese steel made up 1.4 million tons of this, or 74.2% of the total HRC imports in that period.

The surge in steel imports into Vietnam shows no signs of abating.

In 2023, Vietnam imported 13.8 million tons of various steel products (including temporary imports for re-export and imports into export processing zones), up 3.2% from 2022 and 11% from 2021. The country spent up to $10.4 billion on steel imports in 2023.

Most steel products imported into Vietnam have increased compared to 2022 and 2021. The largest imported product was hot-rolled steel (HRC), with 10 million tons imported, up 2.84% from 2022 (including hot-rolled coils and sheets), making up 73% of the total steel imports into Vietnam.

Following HRC, construction steel imports reached nearly 1.3 million tons, up 7.8% from 2022 and 33% from 2021. Coated steel imports totaled 1.16 million tons, an increase of 20.68%.

According to the Vietnam Steel Association, in 2023, imports from China accounted for nearly 8.3 million tons, or over 62% of the total steel imports. Japan accounted for 14.3%, South Korea 8.3%, and others made up the rest.

For hot-rolled steel alone, 70% of imports came from China, putting significant pressure on domestic production.

The increase in Chinese steel imports is partly due to the fact that most imported steel products into Vietnam have zero import duties. Prices of steel from China and other countries supplying Vietnam have fallen significantly. Chinese HRC prices dropped from $618 per ton in Q1 2023 to $557 per ton in Q4, currently ranging from $520 to $560 per ton depending on the type. This has led to unhealthy competition, with signs of dumping, squeezing domestic production.

Regarding domestic steel production capacity, the Vietnam Steel Association reports that domestic steel producers have a total production capacity of around 23 million tons of crude steel (billets, slabs) and 38.6 million tons of finished steel (including construction steel, hot-rolled coils, cold-rolled steel, coated steel, and pipes). In 2023, these companies produced 27.7 million tons and consumed 26.3 million tons, with exports reaching 8 million tons.

"Domestic production capacity essentially meets domestic demand. Furthermore, Vietnamese steel meets international standards and is exported to many countries worldwide," said a representative of a steel company.

The slowdown in China's economy and the "freezing" of its real estate market have weakened domestic steel consumption, prompting China to push for exports and exert pressure on many markets, not just Vietnam. China produces several million tons of steel daily, equivalent to Vietnam's entire monthly production.

In response to the pressure from steel imports, the Vietnam Steel Association warned about the situation in 2023. Based on the association’s recommendations, in October 2023, Deputy Prime Minister Trần Hồng Hà directed the Ministry of Industry and Trade to closely control steel imports according to regulations on managing domestic and imported steel quality.

Notably, the Deputy Prime Minister also called for continued support for domestic steel producers and the application of necessary protective measures in accordance with domestic laws and international practices to combat dumping and limit unfair competition.

Additionally, the Ministry of Science and Technology, in coordination with the Ministry of Industry and Trade and relevant agencies, will review the Vietnam Steel Association’s recommendations, considering international experiences and Vietnam’s actual needs, and revise the current legal framework, including Circular No. 58/2015/TTLT-BCT-BKHCN dated December 31, 2015, on the management of domestic and imported steel quality.

Experts warn that the increasing import of cheap Chinese steel could disrupt the trade balance, drain foreign currency, and cause revenue loss for the state budget. Spending billions of dollars on steel imports contributes to pressure on the VND-USD exchange rate, which has risen significantly over the past two years. Additionally, domestic producers may face substantial pressure, potentially having to scale back production if no protective measures are implemented.

In response to reporters, a representative from the Trade Remedies Authority stated that to initiate a trade remedy case, companies must submit a case file to the Authority. Different trade remedy measures have varying conditions. For example, in anti-dumping cases, the company must represent more than 50% of the industry. The file must assess whether imports have harmed domestic production, including data to evaluate the impact of the sudden increase in imports on domestic industries.

Source: Vietstock