Many solutions to overcome difficulties for the steel industry

Steel industry depends on imported raw materials

According to the Ministry of Industry and Trade, the steel industry is currently facing many difficulties because global demand and domestic economic growth have not yet fully recovered compared to the pre-pandemic period, especially the decline in the real estate industry leading to a decrease in demand for input steel for production in the construction and export industries; increased raw material prices leading to high production costs; high inventory of steel circulating in the market; especially in the Chinese market leading to a large increase in inventory, businesses lacking orders... directly affecting the lives of workers and laborers.

The Ministry of Industry and Trade is developing and is expected to soon submit to the Prime Minister for promulgation the Strategy for the Development of Vietnam's Steel Industry to 2030, with a vision to 2050.

In addition to temporary problems, the steel industry also has long-term bottlenecks. Production capacity is still limited, Vietnam continues to be a country with a steel trade deficit. Crude steel production basically meets domestic production needs, there is a shortage of high-quality steel products and technical steel.

Vietnam continues to import rolled steel (accounting for over 50% of total import turnover), mainly hot-rolled steel. Since 2017, Vietnam has been producing hot-rolled steel with increasing output, accounting for a high proportion, but only meeting about 50% of domestic market demand. In addition, Vietnam continues to import shaped steel, some metal-coated and color-coated steel products (accounting for about 20-25% of domestic consumption demand).

The steel industry depends on imported raw materials from abroad (scrap steel, coke, iron ore, steel billets, and other products, etc.), especially in the production of crude steel, leading to a passive situation in prices. When input material prices fluctuate, domestic steel prices must also be adjusted accordingly.

Production technology is still limited. Except for some recently established steel complexes with closed technology from upstream with capacity in the world's upper middle group such as Hung Nghiep Formosa, Dung Quat Steel Complex... most of the remaining production units are small-scale (under 0.5 million tons/year), using non-closed, outdated technology, consuming a lot of energy, so their competitiveness is low and they cause environmental pollution.

Risk of losing domestic market

Sharing at the Online Conference on removing difficulties, promoting production and consumption of cement, steel and construction materials held this morning, June 15, Mr. Nghiem Xuan Da, Chairman of the Vietnam Steel Association (VSA), commented that with the current recovery momentum, it is forecasted that finished steel production in 2024 could reach 30 million tons, an increase of 7% compared to 2023. However, this recovery is uncertain and steel enterprises still face many difficulties.

Specifically, as China continues to increase its steel exports, Vietnamese steel producers face the risk of losing their domestic market. According to statistics from China Customs, in the first 5 months of 2024, China exported 45 million tons of steel, up 25% over the same period in 2023. Chinese steel continues to flood the Vietnamese market. In the first 4 months of 2024 alone, steel imports were more than 5.4 million tons, up 42% over the previous year. Of which, Vietnam imported 3.7 million tons of steel from China, accounting for 68% of total imports.

" In addition, the "oversupply" situation of many domestic steel products along with the increase in imported steel will make the price competition of domestic finished steel products more fierce. The unstable world market, increasing international freight rates... also pose many risks for steel industry enterprises ," said Mr. Nghiem Xuan Da.

Faced with current difficulties, the Vietnam Steel Association has recommended that the Government direct relevant agencies to continue to develop and improve the system of technical management standards, quality management standards, and technical barriers to prevent steel products that do not meet technical safety and environmental standards from flooding the Vietnamese market. The Ministry of Industry and Trade promptly applies trade defense measures (self-defense, anti-dumping, anti-subsidy, and trade avoidance measures) to prevent unfair competition and protect domestic production.

At the same time, accelerate the synchronization of stimulus channels for steel products such as the real estate market, construction market, the program to build 1 million social housing, promote public investment...

The Vietnam Steel Association recommends that the Ministry of Industry and Trade continue to guide and support steel exporting enterprises to promptly and effectively respond to trade defense cases against steel production abroad. The Ministry of Industry and Trade needs to speed up the development and submission of the Vietnam Steel Industry Development Strategy to 2030, with a vision to 2050, in conjunction with specific policies for the steel industry to grow green and sustainably. In the meantime, there is no Steel Industry Development Strategy, so it is necessary to have measures to manage investment in large-scale steel projects to control the balance of supply and demand, avoid wasting resources, land capital, protect the environment, reduce greenhouse gas emissions, and convert to green production and consumption.

The Steel Association proposed that the State Bank soon have a policy to stabilize exchange rates, maintain reasonable electricity prices, and offer preferential interest rates on investment loans for large-scale steel projects because of the characteristics of steel production projects requiring large investment costs and long capital recovery periods.

The Association recommends that relevant units soon study solutions and green financial packages to support steel enterprises in green transformation according to the National Strategy on Climate Change and the Government's commitments at COP26.

Continue to solve difficulties

Responding to the proposal of the Vietnam Steel Association, the representative of the State Bank affirmed: Banks are always ready with enough capital for enterprises in the steel, cement and construction materials industries to borrow when there is a need for capital for feasible projects. The current exchange rate is fluctuating, but the exchange rate issue is being well controlled by the State Bank.

The State Bank will continue to hold further conferences on removing credit difficulties for steel and cement enterprises in accordance with the Government's directive of "harmonizing benefits and sharing risks", a State Bank representative announced.

The representative of the Ministry of Finance agreed with the opinion of the Vietnam Steel Association on the need to apply appropriate trade defense measures to protect domestic manufacturing enterprises. Accordingly, import and export taxes need to be adjusted in an increasing direction, with low input levels and higher taxes on more refined products, contributing to creating legal barriers to protect domestic manufacturing enterprises.

To continue to remove difficulties for the steel industry, the Ministry of Industry and Trade is developing and is expected to soon submit to the Prime Minister for promulgation the Strategy for the Development of the Vietnamese Steel Industry to 2030, with a vision to 2050. The Ministry is also completing the draft to report to the Government to submit to the National Assembly for promulgation of the Law on Key Industrial Development. Accordingly, the long-term goal is to develop the steel industry into a national foundation industry, meeting domestic demand and rapidly increasing exports.

Regarding loan support, the Ministry of Industry and Trade has proposed that the Ministry of Finance review, update and have appropriate import tax regulation policies for a number of steel products with large price fluctuations; proposed that the State Bank direct and encourage commercial banks to implement preferential credit packages to support investment, production and trading of steel.

Regarding the issue of massive steel imports into the market, the Ministry of Industry and Trade has regularly reviewed and assessed the impact of steel imports, received feedback from the business community and promptly protected businesses in the domestic market through trade defense measures (anti-dumping, anti-tax evasion, anti-subsidy, trade defense) and technical measures. In addition, the Ministry also provided guidance and support for steel exporting businesses to promptly and effectively respond to steel product trade defense cases abroad.

To remove difficulties and promote production and consumption of cement and steel in the coming time, Prime Minister Pham Minh Chinh requested to fight against smuggling, trade fraud, counterfeit goods, and fake goods; have technical barriers to reduce imports, improve quality, and create better competition.

The Prime Minister also proposed focusing on proposing key tasks and solutions, breakthroughs in solving bottlenecks to remove difficulties and obstacles, in order to promote production, consumption, and sustainable development of this industry in Vietnam.

Source: https://congthuong.vn/nhieu-giai-phap-go-kho-cho-nganh-thep-326396.html