Many advantages for Vietnam Steel industry

Vietnam's steel industry is having many advantages.

Many advantages

Looking back at 2024, according to the Vietnam Steel Association (VSA), Vietnam's socio-economic situation in 2024 continues to recover, with growth gradually improving month by month and quarter, inflation lower than the target, major balances are ensured, results in many important areas reach and exceed the set targets, being a bright spot in economic growth in the region and the world.

Crude steel production reached more than 21.98 million tons, up 14% over the same period in 2023; Domestic crude steel consumption and sales reached 21.41 million tons, up 14% over the same period in 2023. Of which, mainly flat billet (slab) exports reached 2.783 million tons, up 55% over the same period in 2023.

Production of finished steel products of all kinds reached 29.443 million tons, up 6.1%. Of which, production of metal-coated and color-coated steel reached the highest growth rate of 23.1%, construction steel increased by 10.1%, steel pipes increased by 3.5% and hot-rolled coil (HRC) steel was 1.5%; only cold-rolled coil production recorded a negative growth rate of 19.4%.

Finished steel sales reached 29.09 million tons, up 10.4% year-on-year. Growth was recorded in most products, with cold rolled coil (CRC) increasing the most at 34.6%; followed by galvanized and color-coated steel at 26.9%, construction steel at 9.3% and steel pipes at 5.5%, with HRC down 3.3% year-on-year.

Of which, finished steel exports in 2024 reached 8.042 million tons, down slightly by 0.6% over the same period in 2023; in which all items recorded growth except hot-rolled coil down 33.8%.

Steel prices have remained stable since the end of 2024 until now. Currently, steel products such as CB240 rolled steel and D10 CB300 rebar are commonly priced from 13.2 - 13.9 million VND/ton. HRC tends to decrease in price, so galvanized steel has also been adjusted down.

With raw material prices remaining stable and products sold unchanged, steel enterprises have achieved many advantages in the first months of 2025. In particular, for Vietnam Steel Corporation (VNSTEEL), in January 2025, the consumption output of long rolled steel is estimated at 134 thousand tons; cold rolled steel is estimated at nearly 74 thousand tons, up 37.3% over the previous month and up 10.7% over the same period. Galvanized steel is estimated at over 37 thousand tons, up 32.5% over the previous month and up 12.1% over the same period.

Meanwhile, Hoa Phat Group produced 8.7 million tons of crude steel in 2024, up 30% compared to 2023. Sales of HRC steel products, construction steel, high-quality steel and steel billets reached 8.1 million tons, up 20%. Of which, construction steel and high-quality steel reached 4.48 million tons, up 18% over the same period last year. HRC hot-rolled coil produced more than 3 million tons, up 5% compared to 2023.

At the Conference between the Government Standing Committee and enterprises on the morning of February 10, Chairman of Hoa Phat Group Tran Dinh Long said that with large investment in production, the Group is focusing on producing high-quality steel to help replace imported goods. Therefore, Hoa Phat responds to the country's double-digit growth target by committing to develop at least 15% per year in the 2025 - 2030 period.

In the public investment plan for the period 2025 - 2030 with large capital, especially the urban railway project of Hanoi, Ho Chi Minh City, Lao Cai - Hanoi - Hai Phong railway project, the leader of Hoa Phat also said that he is ready to invest an additional 10,000 billion VND for the steel rail factory.

The Chairman of Hoa Phat also committed to ensuring the supply of steel for the Railway Corporation to carry out the projects. It is expected that about 10 million tons of steel will be needed, and Hoa Phat committed to ensuring the quantity of 10 million tons, quality, delivery schedule and price lower than the import price.

Pressure from imports

During an Oval Office signing ceremony earlier this week, US President Donald Trump announced a 25% tariff on foreign steel and aluminum, which will be implemented “without exception or exemption.” The executive action is the latest in a series of aggressive trade policies the US president has taken since taking office last month.

The tariffs would affect every country that exports steel and aluminum to the US, with about a quarter of the steel used in the country coming from Canada, with Brazil and Mexico being the top suppliers, followed by South Korea and Vietnam. Mexico and Canada accounted for about 40% of US steel imports last year.

This is an extension of the Section 232 tariffs enacted by Mr. Trump in 2018, which initially imposed a flat 25% tariff on steel imports but included exemptions for a number of countries, including Canada, Mexico, Brazil, South Korea and the United Kingdom. The new tariffs maintain the Section 232 tariffs and eliminate all exemptions. The new law will take effect on March 4, 2025.

For Vietnam, steel imports into the US have been taxed at 25% since 2018 under Section 232. Therefore, Vietnam's steel is not affected by this tax increase, so there is little impact on the Vietnamese steel industry regarding exports to the US.

According to SSI Research, the new tax action may even be somewhat positive for the Vietnamese steel industry because it puts Vietnam's import tax rate before taking into account other protective tariffs on par with other countries. Vietnam's steel exports to affected countries such as Mexico and Canada are also relatively small as of December 2024, they are not in the top 10 steel export markets of Vietnam according to VSA data.

However, Mr Trump's announcement of an additional 25% tariff could make it more difficult for China to deal with its overcapacity - a problem that has persisted for years after the pandemic.

Industry experts believe that China's search for other markets to consume its excess steel could increase global trade tensions, and Chinese steel could divert excess production to Europe, Asian countries and possibly Vietnam.

In fact, according to Chinese customs data, China's total steel exports increased by 22.7% in 2024 to a record high of 111 million tons, with only 0.8% of those shipments going to the US. China's steel exports to the US reached just 891,700 tons in 2024, up 5.5% year-on-year.

Source: https://kinhtedothi.vn/nhieu-thuan-loi-cho-nganh-thep-viet-nam.html