Vietnamese aluminum industry faces threat from Chinese imports

By Anh Minh   December 31, 2018 | 11:26 pm PT
Vietnamese aluminum industry faces threat from Chinese imports
A worker checks aluminum rolls at a warehouse inside an industrial park in Binzhou, Shandong province, China. Photo by Reuters
Cheap aluminum imported from China is hurting Vietnamese producers who fear they will not be able to compete.

Nguyen Hong Linh, owner of an aluminum manufacturing firm in Hanoi, said he has not been able to expand despite having the capital.

"My company, along with other aluminum manufacturers, has been reducing production since the beginning of the year."

Most industry players VnExpress spoke to have in fact been reducing production, with some operating at only 30-40 percent of capacity.

Vu Van Phu, chairman of Hanoi company Fran Alumi, lamented this is because locally made aluminum has to go through more inspections than Chinese imports. Vietnamese aluminum has to go through multiple examinations of origin and quality, he claimed.

Another challenge is that the input value added tax (VAT) refund for Chinese products has been hike from 9 percent to 13 percent since September, he said.

The higher tax refund means Vietnamese manufacturers are unable to compete on price, he added.

Experts have been sounding warnings that China could export cheap goods in large quantities to Vietnam, not just aluminum but also steel and other industrial products, amid its trade war with the U.S.

The U.S. International Trade Commission (ITC) earlier this month slapped duties of 96.3-176.2 percent on common alloy aluminum sheet products from China after claiming that the import of Chinese products has harmed American producers.

As a result of this, China, which accounts for half the world’s supply of aluminum according to the International Aluminum Institute, could seek to export to neighboring countries, including Vietnam, according to industry insiders and economists.

Official data shows that Chinese products account for 30 percent of Vietnam’s aluminum imports, a figure which has tripled in the last two years. Imports from other markets known for high-quality aluminum such as Germany and Taiwan account for only 2 percent.

Linh, the Hanoi-based aluminum manufacturer, is concerned about his business’ prospects after the 90-day trade war truce between China and the U.S. comes to an end.

"If the two countries cannot negotiate, the U.S. will impose higher tariffs on China, and China could seek to export its aluminum via Vietnam to the U.S."

Other Vietnamese manufacturers are concerned that these products, with low prices and quality, would slow down or even halt their production.

This happened last year when large volumes of Chinese aluminum came into Vietnam, and customs authorities had to curtail the imports. 

The Trade Remedies Authority of Vietnam said recently it is investigating if Chinese aluminum is hurting Vietnamese producers.

While the industry is concerned that Vietnam could become China’s dumping ground for cheap materials and scrap, Nguyen Trung Tien, head of the General Statistics Office’s trade statistics department, said authorities would intervene to preclude this.

A spokesperson for the Vietnam Aluminum Association said aluminum imports from China need to be reduced, checks need to be increased and dumping should be prevented and domestic distribution encouraged.

Local manufacturers also need to improve their technology and optimize manufacturing to reduce prices, and without these changes, "Vietnamese aluminum businesses could lose in their own backyard," the spokesperson added.

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