Domestic HRC hot-rolled steel "supply does not meet demand", should imports be restricted?

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HRC consumption demand is currently in the range of 10 million to more than 13 million tons per year. Photo: ST

More specifically, data from the General Department of Customs shows that Vietnam mainly imports iron and steel of all kinds and products from the Chinese market with a value of US $1.72 billion, an increase of 91.2%, respectively. 818 million USD compared to the same period last year. The Chinese market accounts for 62% of the country's import value of iron and steel of all types and products.

Of which, with hot rolled steel products (HRC) alone, Vietnam imported 1.89 million tons, worth over US $ one billion, but HRC steel sources from China were 1.4 million tons, accounting for 74.2% of the total.

According to the Vietnam Steel Association (VSA), steel imports into Vietnam will continue to increase sharply in quantity from 2023 to the first months of 2024. Finished steel production capacity includes construction steel and hot-rolled steel coils (HRC), cold rolled, galvanized steel, steel pipes reached about 38.6 million tons/year. Vietnamese steel has met international standards and is exported to many countries around the world.

Therefore, many opinions are concerned that large imports of iron and steel from China will put great pressure on domestic production. Furthermore, the selling price of HRC steel from China has also decreased, which may cause unfair competition. Therefore, there has been a recommendation that it is necessary to apply trade defense measures and initiate an anti-dumping investigation on HRC steel products imported from China.

However, in the written petition sent to the authorities by the group of seven steel enterprises including Hoa Sen Group Joint Stock Company (HSG), TVP Steel Joint Stock Company, Nam Kim Steel Joint Stock Company, Dong A Steel Sheet Joint Stock Company, Phuong Nam Steel Sheet Company, Pomina Steel Sheet Joint Stock Company, Vina One Steel Production Joint Stock Company, these businesses believe that if they apply trade defense measures, it could affect their performance to the steel industry.

Documents from these companies explain that the whole of Vietnam's HRC consumption demand is currently in the range of 10 million to more than 13 million tons per year, both for the production of finished products and for storing inventory warehouse necessary for production and business activities.

However, domestic HRC products are only produced by two enterprises, including Hoa Phat Group (HPG) and Formosa Ha Tinh Hung Nghiep Iron and Steel Co., Ltd. (FHS). The total designed HRC production capacity of these two units is about 8.2 million tons/year. Assuming HPG and FHS run at maximum capacity and only sell domestically, not for export, they cannot meet domestic demand.

VSA's newspaper in December 2023 said that the output of HRC sold domestically in 2023 reached 3.403 million tons, allocated for sale to businesses producing galvanized corrugated iron, colored corrugated iron, and steel pipes as raw materials to serve the industry next production stage. Thus, the output of Vietnamese HRC manufacturers selling in the domestic market can currently only meet about 30% of Vietnam's HRC demand.

Regarding the assertion that HRC products from China imported into Vietnam are dumped, the documents of the above mentioned steel enterprises were negative. Calculating the dumping margin based on data on the domestic selling price of HRC in the Chinese market from S&P Global in 2023 and the average export unit price... is only 1.26%.

While the 2017 Law on Foreign Trade Management stipulates: "No anti-dumping measures shall be applied to imported goods with a dumping margin not exceeding 2% of the export price of goods to Vietnam."

Seven steel enterprises also pointed out the fact that HPG and FHS sell HRC to Vietnamese galvanized steel pipe and steel pipe enterprises at a price 10-20 USD/ton higher than the import price, the peak difference can be up to 40-50 USD/ton. but it is still used by domestic businesses for reasons of origin.

From the above analysis, the document of seven steel enterprises said that if trade defense measures are applied, it could negatively affect Vietnam's steel industry in particular and the entire economy in general. Because imposing trade defense taxes or building any other tariff or non-tariff barriers on imported HRC will reduce the competitiveness of domestic galvanized steel pipe and steel pipe manufacturing enterprises. Moreover, it also affects the healthy business environment among businesses as well as impacts other industries such as construction, real estate, industry, logistics...

However, according to experts, steel imports also pose a risk of trade imbalance, so the authorities need to find a synchronous solution to harmonize and create industrial competition equality in the steel market.