According to the market sources, post-U.S. tariffs announcement in Mar’18 which has resulted in the full-blown trade war between China and the U.S. many Chinese steel firms are moving their manufacturing facilities to other markets, including Vietnam.
In Vietnam’s Dong Nai province, a Chinese steel manufacturer, Yongjin Metal which was refused an investment license one year ago, has once again registered to develop a cold-rolled stainless steel project with the capacity of 300,000 tonnes. Apart from this, many other Chinese steel manufacturers have increasingly planned to penetrate Vietnam market via acquisition of unprofitable Vietnamese steel enterprises and inherit their operation licenses.
Meanwhile, the imports of Chinese steel into Vietnam seems to be climbing. The country imported nearly 2.74 MnT of steel worth USD 1.49 billion in the first two months of 2018, a 62% increase year-on-year basis.
Also, the consumption of steel in Vietnam remains high. Increased investment of big auto groups like Toyota, Mitsubishi, Thaco and VinFast also boosts the demand of high-quality steel attracting Chinese firms to invest in Vietnam. Besides, Chinese steel firms in Vietnam are also finding motivation from increasing presence of the Chinese construction companies including CSCEC, Tung Feng, most of which have won bids for many key projects in Vietnam in past few years.
However, the shift of Chinese steel poses new risks to Vietnamese steel firms, who are still protected under “safeguard tariffs” that Vietnam has imposed on steel imports in 2016. In response to this new penetrative move of Chinese firms, the Vietnam Steel Association (VSA) has promptly reacted and has requested the government not to issue new investment licenses for projects that will worsen overcapacity.
Also, VSA fears that Chinese steel firms efforts to sell steel products under the name of ‘Made in Vietnam’ to various other countries where Chinese steel products are facing protectionism measures will bring side-effects to the Vietnamese steel in the form of trade barriers.
Vietnam continues to be an attractive market because the average consumption per head in Vietnam is still lower than in the world.
Dramatic increase in Vietnam’s steel exports during Jan-Jul’18
According to Vietnam’s latest customs data, the country has exported 3.41 MnT of steel in first seven months of 2018 registering an increase of 40% in volume and 56% in turnover against the corresponding period of last year.
Out of the total exports, exports to Cambodia increased by 49% in volume reaching 717,572 tonnes, whereas exports to the U.S. reached 532,779 tonnes increasing sharply by 72% in volume. Exports to Malaysia increased by 89% in volume to reach 391,607 tonnes and steel exports to Indonesia increased by 22% in volume to 372,514 tonnes.
Vietnam’s steel export price increased by 11% reaching an average of USD 743 per tonne. Of which, exports to Hong Kong reached the highest rate with USD 2,996 per tonne, up 33%. Export price to Germany increased sharply by 54% to reach USD 2,314 per tonne. In contrast, exports to Taiwan has the lowest price of USD 557 per tonne, a year-on-year decrease of 14%.
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