Local firms filling out domestic steel sector

February 04, 2017 | 17:00

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The domestic firms are making the Vietnamese steel sector hot as they are expanding their capacities in early 2017, despite soaring steel imports, while foreign investors stayed away.

Hoa Phat Group, one of the country's largest steel producers, has celebrated receiving the investment certificate for the Hoa Phat Dung Quat iron and steel production complex. The group’s general director said that the project aims to triple its production capacity to up to six million tonnes over the next five to 10 years, using modern blast furnace technology.

Construction will resume on the Guang Lian Dung Quat steel project, which had its investment certificate revoked in early September due to long delay. Hoa Phat will take up 372.7 hectares with a total investment capital of VND60 trillion ($2.7 billion).

Of the area, nearly 340ha will be used for building the factory and 27ha for a specialised port.
The annual capacity of the first phase will include one million tonnes of construction steel products and high-quality rolled steel each. The second phase is designed to produce two million tonnes of hot-rolled steel flat bars for machinery manufacturing.

Hoa Phat expects to earn $2 billion in revenue per year and contribute VND4 trillion to the state budget after the project comes into operation.

In the same way, Ho Chi Minh City-listed Pomina Steel Corporation received approval last week to build another project in Ba Ria Vung Tau. The capital is estimated at $31 million.

A representative of Pomina Do Duy Thai said that its new 14-hectare project will have a capacity of 600,000 tonnes per year. Besides, it plans to expand its current Pomina 3 (steel manufacturing facility, also located in the province.

The country now has an abundant supply of simple-process steel products, like construction steel, but relies on the import of high-technology products, like hot laminated steel, that local enterprises cannot produce, according to the Vietnam Steel Association.

In a Q&A session with National Assembly deputies last year, Tran Tuan Anh asked: “Is it not a paradox that we must pay for imported steel when Vietnam has some 1.5 billion metric tonnes of iron ore reserves, but not enough steel plants to process it?”

Vietnamese giant Hoa Sen Group also made headlines for planning a $10.6-million manufacturing plant in the central province of Ninh Thuan. Although the new complex is promised to transform the local economy and create 45,000 new jobs, it still sparked controversy over concerns of environmental protection and industrial waste treatment.

The Vietnam Steel Association reported that in the coming time, the domestic steel sector will recover and the steel volume per capita will need to increase 130 kilogrammes to 200-300kg, if the country wants to become an industrialised nation.

Most steel investors called on the government to tighten the quality of domestic products and imported steel that caused difficulties in consumption.

Posco complained that stainless cold-rolled steel was still being imported at low prices and the product have dominated the local market due to lower taxes, a lack of none-tariff barriers, and standard requirements.

ASEAN countries, especially Indonesia, Thailand, and Malaysia, have tightened the import of steel products through applying non-tariff barriers to imported steel products. In his opinion, the Vietnamese government should should introduce similar measures to increase the competitiveness of domestic products as well as the quality of imported steel products.