[Market Insight]Vietnam Steel Industry Overview

Vietnam’s GDP growth in 2021 has fallen short of forecasts to 2.58 percent, lower than the 2.91% in 2020, as the COVID-19 pandemic has imposed adverse impacts on all sectors of the national economy, according to the General Statistics Office (GSO). While the economic growth was a decade low, the steel industry in the country still saw positive growth, increasing by over 16% compared to the previous year. Despite the slowdown in domestic market demand, the substantial growth in exports has made Vietnam a net exporter of steel in 2021. In 2021, Vietnamese steelmakers have been focusing on expanding steel exports in response to weak domestic demand, resulting in a significant increase in shipments to overseas markets.

Vietnam Steel Figure in 2021

In 2021, the country produced 33.29 million tons of steel, up 19.1% Y-o-Y, while finished steel sales reached 29.42 million mt, up 15.6% Y-o-Y. This total figure comprised exports of about 15 million tons, with sales of more than $12.7 billion to over 30 countries and territories, with coated steel sheets witnessing the highest export volumes.

Vietnam Export Destination

In 2021, Vietnam's steel exports are expected to reach 13 million tons, up 19% Y-o-Y, according to the General Statistics Office of Vietnam. Even though the country's exports to China and Thailand fell by about 26% and 33% year-on-year, respectively, Asia remained Vietnam's main steel export market.

In addition, Vietnam's steel exports to the United States, especially flat products, soared 4.5 times to 1.05 million tons in 2021. At the same time, due to competitive prices, Vietnam’s steel exports to the EU also rose significantly in 2021, with exports to Belgium rising 7 times to 860,000 tons, and exports to Italy rising 4.5 times to 550,000 tons.

Robust overseas demand has boosted the operations of Vietnam's largest steelmakers, especially the Hoa Phat Group. In 2021, the group's steel exports rose 16% y-o-y to 2.6 million tons, which helped the group to diversify its sales amid the COVID-19 pandemic.

In 2020, the top 4 markets for Vietnam’s steel exports are ASEAN (42.6%), China (39.39%), the European Union (2.88%) and the United States (1.87%).

In 2021, however, the market landscape has changed significantly. Although ASEAN is still a traditional export market for Vietnam, the share of exports to the region has dropped to 28.64%, and that to mainland China has dropped to 26.37%. Conversely, exports to the EU and the US have increased to 12.56% and 7.51%, respectively.

Vietnam Steel Mill Capacity Overview

Formosa

Established on June 12, 2008, it is the largest steel mill in Vietnam, located at Vung Ang Economic Zone, Ky Long Ward, Ky Anh Town, Ha Tinh Province. The total revenue of this company in Q1 of 2021 reached 1094 million USD, an increase of 56% over the same period in 2020. The production of its key products such as sheet billet, large plate billet, and small plate billet reached 1,627 thousand tons, up 17% over the same period in 2020.

Hoa Phat Group

Hoa Phat is also one of the most important steelmakers in Vietnam. With a capacity of over 8 million tons of crude steel per year, the group holds the No. 1 market share in Vietnam for construction steel and steel pipes with market shares of 32.5% and 31.7%, respectively. At the beginning of 2021, with the commissioning of the 4  blast furnace at the Rongju Steel Plant of Hoa Phat Iron and Steel Group in Quang Ngai Province and the commissioning of the rebar rolling line of Vietnam American Steel Corporation (VAS) in An Hung Tuong Steel Plant in Thanh Hoa Province, Vietnam added 1 million tons/year pig iron capacity and 500,000 tons/year rebar capacity.

Hoa Sen Group Joint Stock Company

Established on August 8, 2001, Hoa Sen Group is also one of the leading steel exporters in Southeast Asia, mainly producing galvanized steel products, color coated steel products, cold rolled steel coils, steel tubes, and other steel products. Currently, the group owns more than 40% market share of corrugated steel and nearly 20% market share of steel pipes.

Pomina

Pomina is the fifth largest construction steel manufacturer in Vietnam with a market share of 4%. In 2021, the company has built a new blast furnace steel mill which upgraded the efficiency of steel production, while also improving the quality of long products. The current production capacity utilization of the Pomina 3 steel mills in southern Ba Ria-Vung Tau Province is 80%.

Vietnam Steel Market Outlook 2022

Many insiders believe that 2022 will be a promising year for the Vietnam steel industry when the COVID-19 pandemic is brought under control and construction demand rebounds strongly, which will make steel consumption continue to increase sharply.

According to Mr. Nguyen Thanh Trung, Vice Chairman of the Association, Chairman of Ton Dong A Joint Stock Company, said that Vietnam will strive to develop green steel to meet European standards, while emissions tax will be imposed on imported products, so the national steel sector needs to be prepared to maintain and increase its export market share.

The outlook for Vietnam’s steel market in 2022 is expected to be better when the authorities concerned issued directions on stabilizing and developing production and business activities in response to COVID-19 pandemic.

The representative of the Vietnam Steel Association (VSA) noted that the Government’s Resolution No. 01/NQ-CP, issued on January 9, 2022, with tasks and solutions for socio-economic development will greatly boost Vietnam’s steel industry in 2022.

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