Domestic steel companies struggle to cope with massive flow of imports

Thai Nguyen Iron and Steel Joint Stock Corporation (TISCO) has been unable to offload more than 100,000 tonnes of steel billet, forcing the company to cut its output by 50 percent, according to General Director Hoang Ngoc Diep.

“We produced over 300,000 tonnes of steel in 2015 at a loss of VND300 billion ($14.28 million).”

“If this continues, we may have to stop production completely in the short term, and this could lead to bankruptcy in the long term. If the domestic steel industry is driven to bankruptcy, Vietnam will have to depend entirely on outside sources for steel products. If that happens, we will be forced to buy steel billet for about 10 million dong per tonne rather than 6.5 million dong per tonne,” said Diep.

The glut of Chinese steel in 2015 has been cited for the problem.

"Steel prices in the Chinese market are very low due to a huge surplus, so China is trying everything it can to export steel, even dumping," said Ho Nghia Dung, chairman of the Vietnam Steel Association (VSA).

Nguyen Van Sua, vice chairman of the VSA, added: Importing such a large volume also means closing down steel factories."

TISCO and three counterparts sent a petition to the Ministry of Industry and Trade on December 15, 2015, requiring safeguards for the domestic steel industry. Under the proposal, a tax rate of 45 percent will be levied on steel billet and 33 percent on steel bars imported into Vietnam, instead of 9 percent and 10 percent as currently adopted.

In response, the Ministry of Industry and Trade issued a statement on December 25 saying it will conduct a six month investigation before making a final decision on whether safeguard measures for steel imports should be adopted.

Vietnam imported more than 15.6 million tonnes of steel in 2015, of which China accounted for 26.8 percent (4.19 million tonnes), according to data from Vietnam Customs.

In January this year, Vietnam's steel imports reached 1.48 million tonnes and China remained the key supplier with 922,585 tonnes (62 percent). 

“We urgently need to adopt temporary safeguards on steel imports to protect the domestic industry. Otherwise, Vietnamese steel enterprises will go bankrupt in the next two years,” said Sua.