Cheap Chinese steel is flooding markets around the world causing headaches for local steel makers. This has led to anti-dumping investigations in a number of countries that look to have caught Vietnam in the crossfire. It is not, however, going quietly but launching its own anti-dumping investigations as well. In this context, this article looks at what has happened to Vietnam’s steel industry, how it is responding, and what that might mean moving forward.
The Long Bien Bridge in Hanoi, one of the first steel truss bridges to cross the Red River back in the late 19th century, still stands today testament to the longevity and subsequent value of steel as a key construction material.
Not only that, but it also stands as a homage to the central role that steel has played in Vietnam’s economic development, though it is perhaps more noticeable today in the skylines of Hanoi and Ho Chi Minh City which have shot up at breakneck speed fueling rapid growth in Vietnam’s steel industry.
This rapid growth, however, has slowed considerably since 2022 on the back of the bursting of Vietnam’s housing bubble which has seen local demand for construction materials fall. But whereas this has made a dent in Vietnam’s steel industry, it’s China’s housing downturn that has really caused problems.
Whereas in 2021, Vietnam steel producers exported 2.6 million tons of iron and steel to China, in 2022 that number fell to just 99,000. In 2023, it fell even further with just 5,581 tons of steel sent north of the border.
But the problem is not so much that demand for Vietnamese steel in China has fallen, but rather that demand for Chinese steel in China has fallen. This has led China’s huge steel industry to turn to exporting steel at cut-throat prices in order to survive.
As a result, Vietnam’s imports of Chinese steel have gone from just shy of 5 million tons in 2021 to 8.3 million tons in 2023, to 7.2 million tons in the first eight months of 2024 alone–about 70 percent of Vietnam’s steel imports thus far this year.
Those steel imports have become considerably cheaper too. On average, a ton of steel imported from China cost US$973 in 2022, according to Vietnam Customs’ data. Last year, however, it fell to just US$682 a ton.
It isn’t, however, just that cheap Chinese steel is flooding Vietnam, but also that it is flooding markets all over the world. This has seen anti-dumping investigations launched in the EU and US and a number of other countries against Chinese steel imports and this is having knock-on effects for Vietnam.
Firstly, Vietnamese steel producers have had to slash their prices to remain competitive.
In fact, Vietnam’s steel exports have fallen from US$952 a ton in 2022 to just US$729 a ton in the first eight months of this year. What’s more, the narrative that Vietnam is being used as an intermediary for Chinese steel producers to circumvent trade remedies elsewhere is gaining traction which is seeing key export markets grow weary of Vietnamese steel imports.
Of note, South Korea, Canada, India, the US, and the EU have all launched their own trade investigations into steel imports from Vietnam and against a variety of products from steel nails to steel pipes.
That said, Vietnam is not just on the receiving end. It has also launched its own trade investigation into steel products from China, South Korea, and India on the back of complaints from local steel producers.
Hoa Phat Steel in particular has been out front leading the charge. The steel producer has been hit hard by Chinese steel imports with one estimate suggesting the firm’s market share fell from 45 percent in 2021 to 30 percent in 2023. Of note, foreign investors have sold off about 3.59 percent of their holdings in the company over that time though still hold just over 20 percent of the firm.
That said, it’s worth noting that Vietnam’s anti-dumping investigations have been met with some pushback from local steel buyers who have been relishing the cheaper imports with anti-dumping duties likely to hit their bottom lines. This is likely to have knock-on effects too with increased steel prices pushing up construction costs and subsequent costs in the real estate industry, the struggles of which kicked off the steel industry’s most recent challenges to begin with.
That said, the excess supply problem may be on the road to getting worse before it gets better with Vietnam’s steel production estimated to continue to climb this year by as much as 7 percent, according to the Ministry of Industry and Trade.
Not only that, but it was also announced just this month that Thua Thien-Hue province in central Vietnam was looking for an investor for a US$1.29 billion steel plant capable of producing 3 million tons of steel a year potentially adding yet more supply.
That is to say, the market looks to be oversaturated as it is and that’s without the bulk of the trade remedies investigations launched against Vietnamese steel products having been completed. That said, given the huge volumes of steel entering Vietnam from China, it looks a lot like it will be the outcome of Vietnam’s own trade investigation into Chinese steel imports that will really be the arbiter of how profitable Vietnam’s steel industry can be moving forward.
All of this, however, is very dynamic at the moment and the situation is changing frequently. With this in mind, foreign firms interested in keeping track of developments in Vietnam real estate, construction, and of course steel industries, should make sure to subscribe to the-shiv.