VSA recommends Gov’t not approve stainless steel project

Viet Nam’s average steel production reached just 63 per cent of capacity, lower than the global average which is about 76.9 per cent.

The proposal was issued after China’s Yongjin Company announced plans to invest in a stainless steel plant in the southern province of Dong Nai, with a capacity of nearly 300,000 tonnes per year.

In a report sent to the Government Office, VSA said that in recent years, especially in the period 2012-17, the Vietnamese steel market achieved a good growth rate of about 15 per cent per year on average. This has attracted the attention of domestic and foreign investors.

In 2012, the country’s output of steel products reached more than 9.2 million tonnes. It’s up by 12 per cent in 2013; 20 per cent in 2014, 22 per cent in 2015 and 19 per cent in 2016. In 2017, the country produced 17.8 million tonnes, marking a rise of 24 per cent.

"Under the pressure of unbalanced steel supply and demand, protectionism is increasing in all countries to limit the wave of steel imports. The US and EU are examples,” said the VSA report.

The report adds that trade remedies such as anti-dumping, anti-fraud and trade defence were being applied simultaneously in different countries for products originating from China.

In the period 2012-17, China implemented a policy of reducing excess production capacity to restructure the domestic steel industry and gradually transfer excess capacity through a series of investment projects abroad including in ASEAN and Vietnam.

Meanwhile, according to VSA statistics, Viet Nam’s average steel production reached just 63 per cent of capacity, lower than the global average which is about 76.9 per cent (according to World Steel Association statistics as of April 2018). As for stainless steel plants in Vietnam, they have used just 30 per of capacity.

On the basis of data analysis, VSA recommended that State agencies consider only encouraging enterprises to invest in high quality alloy steel products for mechanical production, shipbuilding and the automobile sector, which can not be produced domestically.

In addition, VSA also suggested that it is not necessary to invest in hot rolled coils, construction steel, cold rolled steel, cold rolled stainless steel, welded steel pipes and galvanised steel. It has also proposed the Government and relevant ministries not to approve investment projects of steel products which have surplus output in the country.