Chinese steel threats local manufacturers

JFE in March announced it had signed a memorandum of understanding with E-United Group for studying the feasibility of building and operating an integrated steel project with an annual capacity of 3.5 million tonnes by 2016, and the final decision would be released at the end of this year.

E-United Group has secured a site in central Quang Ngai province’s Dung Quat Economic Zone for
the project. This is a part of JFE Steel’s plan for expansion production in South East Asia or India to meet the increasing demand for steel products in emerging economies.

“We initially said a conclusion will be reached by the end of this year, but we’ll need a bit more time,” Eiji Hayashida, president and chief executive officer of JFE, was quoted by foreign media in an interview in Tokyo early this month.

He said despite appreciating the long-term growth potential in South East Asia, JFE “needs to carefully consider the timing” and would push to lower the Dung Quat-based mill’s costs and decide whether to move to the environmental assessment stage by the end of next March.

“Growing competition from China’s steel makers are the biggest challenge for domestic ones. This could lead to the delay of some investment plans in steel industry,” said Pham Chi Cuong, chairman of the Vietnam Steel Association (VSA).

A year ago, Korea’s Posco VST, the only cold-rolled stainless steel maker in Vietnam, warned that it might have to close production due to tough competition with cheap imported products.

According to the VSA, steel imports from China in 2012’s first eight months mounted 5.5 times on-year to 137,500 tonnes. This pressured all domestic steel-makers, especially in the context of economic slowdown.