Creating a fair competitive environment for the steel industry

Demand for hot rolled steel coil in Vietnam is about 12 - 13 million tons/year (Photo: VSA)

Cheap imported steel is everywhere

During the months of April and May, despite having to continuously reduce prices, domestic steel manufacturing enterprises still faced difficulties from the huge competitive pressure in both quantity and price of imported steel, especially Chinese HRC steel.

Citing the latest figures recently released by the Customs Department, Chairman of the Vietnam Steel Association (VSA) Nghiem Xuan Da warned that the sharp increase in HRC steel imports has put Vietnamese steel producers at risk of losing the domestic market. Specifically, according to statistics from the Customs Department, in April 2024, the amount of HRC steel imported into Vietnam reached 890,000 tons, 1.5 times the production volume of enterprises in Vietnam.

Next, in June 2024 alone, Vietnam imported 886,000 tons of HRC steel, equal to 151% of the amount of steel produced by domestic enterprises. In particular, the amount of imported steel originating from China accounted for a large proportion, accounting for 77%. In the first 6 months of 2024, the cumulative imported HRC steel output reached nearly 6 million tons, an increase of 32% over the same period in 2023. This import volume is equal to 173% of domestic production. Of which, the amount of steel imported from China accounted for 74%, the rest was from Korea, India, Japan and other economies . The import value of HRC steel in the first 6 months reached 3.46 billion USD, of which HRC steel imported from China accounted for 2.5 billion USD.

VSA representative said that in the first 6 months of 2024, the amount of imported HRC steel continued to increase sharply, 1.7 times higher than domestic production, which is a very alarming issue.

According to representatives of some domestic steel manufacturers, the fact that steel continues to be imported into Vietnam in large quantities, especially HRC steel, without being subject to any trade defense measures is a paradox. Not to mention, the trend of steel imported from China shows signs of unfair price competition. For HRC steel, the import price of HRC steel from China is always lower than the average price compared to other markets by 45 - 108 USD/ton. Specifically, the average import price of HRC steel from China in June 2024 was 560 USD/ton. If compared with HRC steel imported from Korea alone, HRC steel imported from China is up to 123 USD/ton lower.

This is also the reason why many steel manufacturing enterprises believe that increasing steel imports will certainly make the domestic manufacturing industry face difficulties, thereby making it unable to produce other downstream products. HRC steel is an upstream material for the production of galvanized steel, cold-galvanized steel, color-coated steel, steel pipes, and other steel products used in many applications in the construction, mechanical, and other industries.

Meanwhile, according to VSA's analysis, the demand for HRC steel in Vietnam is about 12-13 million tons/year. The capacity of domestic HRC steel factories is currently about 9 million tons. The massive influx of imported steel into the country, with import output at times nearly 200% higher than domestic production, has caused the market share of HRC steel sales of domestic enterprises to be lost to imported goods. The market share of HRC steel sales of some domestic enterprises such as Hoa Phat or Formosa also decreased from 42% in 2021 to 30% in 2023.

There is a need for "tough" measures in line with international practice.

As a specialized state management agency, the representative of the Ministry of Industry and Trade said that the investigation and application of trade defense measures continued to be promoted, contributing to protecting and re-establishing an equal competitive environment for domestic manufacturing industries in the context of many imported goods showing signs of being dumped or subsidized, causing serious damage to a number of domestic manufacturing industries.

According to the Ministry of Industry and Trade, steel is one of the most investigated trade defense products in the world. Statistics from the World Trade Organization (WTO) show that by the end of June 2022, countries and territories had conducted about 2,500 trade defense investigations on base metal products, including steel, accounting for more than 30% of the total number of trade defense investigations.

Also by the end of May 2024, of the total 252 foreign trade defense investigations with Vietnam, about 30% of the cases involved steel products. The investigated steel products are quite diverse, including galvanized steel, cold-rolled stainless steel, color-coated steel, steel pipes, steel hangers, steel nails, etc. These lawsuits mostly occurred in Vietnam's main steel export markets such as the United States, the European Union (EU), Australia, etc., of which the United States is the country with the most investigations with Vietnam.

On the other hand, the Ministry of Industry and Trade is reviewing the dossiers of domestic HRC steel manufacturers requesting an investigation to impose anti-dumping tax on HRC steel imported from China and India. The prescribed review period is 45 days from the date of official receipt of complete dossiers (June 14, 2024).

Like Vietnam, the Thai government's authorities are also investigating and considering expanding new anti-dumping measures on HRC steel imported from China because the flood of cheap imported steel has caused the country's businesses to only produce at 30% of capacity, lower than the average of 58% in Southeast Asia.

Regarding this issue, according to the Director of the Department of Trade Defense (Ministry of Industry and Trade) Trinh Anh Tuan, thanks to the application of reasonable trade defense measures, in accordance with international commitments, in addition to protecting domestic industries from unfair competition, it also creates conditions for domestic industries to develop, creating more jobs and added value for the economy. In particular, from a consumer perspective, long-term trade defense measures help the economy not to be completely dependent on imports, bringing stability and better resilience to external impacts and shocks.

Mr. Trinh Anh Tuan said that in many cases, applying trade defense to basic materials also helps increase the ability to take advantage of commitments in free trade agreements. At the same time, it reduces the risk of Vietnam being investigated by foreign countries for evading trade defense measures because we have been proactive and protected domestic raw material sources. In addition, applied trade defense measures have contributed thousands of billions of VND in tax revenue to the state budget. In the coming time, the Trade Defense Department will continue to promote the completion of the legal system on trade defense through the development and submission to the Government for promulgation of a Decree replacing Decree 10/2018/ND-CP on the basis of summarizing the practical work of trade defense in the past 5 years. At the same time, complete 2 new trade defense investigations and 5 reviews of trade defense measures included in the annual work plan in a fair and transparent manner, carefully assessing all factors and complying with current regulations.

These new developments in import-export barriers in the world are also forecasted to cause many steel products from China, including HRC steel, to increase exports to Vietnam to clear inventory. This also requires Vietnamese state management agencies to take "tough" measures to prevent the situation of going around and avoiding taxes to push inventory, causing disadvantages to domestic manufacturers.

Chairman of the Vietnam Association of Supporting Industries Phan Dang Tuat said that domestic enterprises need and expect faster decisions, reflecting the fastest market fluctuations. Just look at neighboring countries such as Thailand and Indonesia, which have lower output than Vietnam, and import volume less than domestic production, and have also used trade defense measures to protect upstream steel production, and immediately see the importance of protecting domestic production in many countries.

According to Mr. Phan Dang Tuat, the fact that large Vietnamese steel manufacturing enterprises have proactively spoken out and requested an investigation to impose anti-dumping tax on Chinese HRC steel when facing the risk of unfair competition from imported goods shows the initiative of domestic enterprises. In the context of a market economy, if these investigations and reviews lead to the application of a trade defense measure, that measure must be applied to the right subjects, at the right level, protecting domestic manufacturing industries but taking into account socio-economic impacts and in accordance with international practices, which will be the foundation for creating a level playing field for businesses to develop./.

Source: https://dangcongsan.vn/kinh-te/tao-lap-moi-truong-canh-tranh-binh-dang-cho-nganh-thep-672485.html