Vietnam is likely to impose tariffs soon on flat steel imports to support its domestic steelmakers. The Asean country has no trade barrier at present and global steelmakers are shipping their products to the country at a lower cost, affecting the local steelmakers sources told Davis Index. 

 

 Steelmakers like Formosa Ha Tinh Steel and Hoa Phat Steel, are likely to increase their combined share to 70pc of domestic finish flat consumption, lowering Vietnam’s dependency on imports. The measures are aimed at protecting the lossmaking local HRC steelmakers. Vietnam already has imposed duties on billet and long steels which is likely to be extended to flat steel imports. 

The proposal to impose 5pc duty on Chinese HRC sales was not accepted by Vietnam’s finance ministry in September, as its potential impact on domestic steelmakers could not be proven. 

 

Formosa steel has annual capacity of 7mn mt with annual production of more than 5mn mt of HRC, sold in the domestic and overseas market. Formosa’s capacity is 75pc of the country’s total. Hoa Phat Steel will commence operations at its integrated Dong Quat mill in second-quarter of 2020 adding 2mn mt annum capacity of HRC in Vietnam.  

 

Vietnamese demand for finished steel products was sluggish in 2019 with a drop in real estate and construction projects amid delays in the approval processes. 

 

Steel demand in Vietnam rose by 23pc to11.8mn mt in the first half of 2019 compared to the prior year. The prices of HRC in the third quarter of 2019 declined by more than $100/mt on weaker demand. 

 

India, the major exporter to Vietnam lowered its finished flat steel prices offering higher discounts. The prices for finished steel started increasing in the fourth quarter globally with an increase in raw material. Demand for Vietnamese steel is likely to increase in 2020 as phase one of the US-China trade deal draws to a close. 

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