HANOI, VIETNAM: Driven by rising steel demands and economic growth, Vietnam is looking to reduce its dependency on Chinese steel. This is evidenced as two of the country’s largest steelmakers look set to embark on multibillion-dollar capacity investments within the country.
In fact, Hoa Sen Group intends to spend $10 billion on production facilities in southern Vietnam’s Ninh Thuan province in order to capitalise on the area’s deep water ports to import raw materials and export its manufactured steel products. Although the company has yet to reveal the details of its new manufacturing facilities in Ninh Thuan, construction is scheduled to occur in 2019, with operations beginning in 2019. Hoa Sen’s new facility would possess a blast furnace, which is a tool that Vietnam still lacks, and would boost an additional capacity that would more than quadruple total outputs to 16 million tons a year in 2031.
Meanwhile, Hoa Phat Group, intends to build a $2.7 billion steelworks in the Dung Quat Economic Zone of Quang Ngai Province and aims to begin operations in 2020. This facility is projected to increase the company’s annual capacity to 4 million tons which would lift the group total by 130 percent. At the same time, the company will be developing a $170 million steel plate mill in Hung Yen Province, which is close to the Dung Quat facility. Scheduled to begin production in 2018, this facility will provide materials for construction projects in Hanoi – one of the country’s biggest markets for architectural steel besides Ho Chi Minh City.
Currently, imports fulfil about 60 percent of local steel demands, with figures increasing to 33 percent in 2017 to reach 15.7 million tons – 61 percent of which came from China. However, inflows of cheap steel, driven by Chinese overcapacity, have increased so rapidly Vietnamese “safeguard” tariffs have been developed in certain situations. This combined with rising tensions over competing territorial claims in the South China Sea, has spurred Vietnam’s government to drive initiatives that are aimed at reducing dependence on Chinese steel. Additionally, Vietnam holds considerable promise as a steel market as the per-capita steel consumption is just below 300kg, which is recongised as a tipping point whereby demand will greatly increase according to industry insiders.
WANT MORE INSIDER NEWS? SUBSCRIBE TO OUR DIGITAL MAGAZINE NOW!