Overview of Vietnam steel industry

Steel producers in Vietnam expect construction steel capacity to reach about 7 million tonnes, outpacing demand estimated at 4 million tonnes. Mr. Pham Chi Cuong chairman of Vietnam Steel Association, stated, "The sector is likely to face an oversupply of steel as projects, mainly foreign invested ones, have boomed in the country in recent years." According to the Vietnam steel sector's 2007 - 2015 development plan with a vision to 2025, as of early last year, three steel plant projects with huge output capacities, totalling about 32.42 million tonnes per year, had been approved. However, Vietnam's steel demand is estimated at only 10 to 11 million tonnes in 2010 and some 20 million tonnes in 2020. Mr. Cuong said that most of investors come from South Korea, Japan, and Taiwan, which are big steel producers and exporters, thus they should be able to find export markets for their products. He also warned of the possibility that firms may use interest rate subsidised loans to import low priced steel that may threaten local products in the domestic market. He added, "We have warned about the risk, and proposed that the Ministry of Finance monitors the issue more closely." JAKS Resources Bhd's venture as an independent power producer (IPP) in Vietnam is meant to buffer the company from the ups and downs of steel manufacturing and construction industries. Group general manager, finance, Chee Seong Heng said the company's latest major project to build and operate a coal-fired power plant in Vietnam was part of its plan to diversify its business. Technical barrier to protect domestic steel industry Vietnam Steel Association (VSA) predicted that in 2010 there would be sharp increase in imported steel volume from ASEAN countries, China and Russia due to the commitment of tax reduction of at least 1 percent for each kind of goods when joining WTO. Therefore, the domestic steel industry will face more difficulty because the enterprises may receive less support from the state, so they will find it hard to compete with low-price imported steel products. Up to April 30, 2010, according to the statistic, Vietnam has already imported 1.277 million tonnes of black steel sheet, 150,000 tonnes of cold-scrolled steel, 834,694 tonnes of hot-scrolled steel, 116,000 tonnes of corrugated steel sheet, 24,000 tonnes of steel bars, 144,000 tonnes of rolled steel and 523,000 tonnes of waste steel. Previously, whenever suffering from pressure from imported steel products, the domestic steel firms called for support from the governance authorities such as the government, ministry of industry and trade and VSA. However, according to the WTO participation roadmap, from 2010 onwards, Vietnam steel industry will no longer be benefited from preferential import tariff. Therefore, now it is necessary to set up technical barrier for reinforcing the domestic steel protection programme.Air Zoom Pegasus 34