Vietnamese steel tries its strength in European market
Steel production at the Southern Steel Company Limited. (Photo: SGGP)
According to the latest report of the Vietnam Steel Association (VSA), from the beginning of the year until now, steel production has reached more than 11.6 million tons, down 8.1 percent over the same period last year. The sales of steel enterprises have also encountered many difficulties as the market was affected by the Covid-19 pandemic. Accordingly, steel sales only reached 10.4 million tons, down 10.7 percent over the same period last year. In which, steel exports exceeded 1.8 million tons, down 24.6 percent over the same period. In June alone, Vietnam exported more than 300,000 tons of steel to foreign markets, with a turnover of nearly US$250 million, up 14.5 percent over the previous month but down 21.9 percent over the same period last year. This is a rather pessimistic figure for enterprises in the steel industry.
In the structure of export markets, VSA said that currently, steel exports to the Southeast Asia market accounts for 54.75 percent of total export volume and 57.8 percent of export turnover. Meanwhile, steel exports to the European market merely reach 4.15 percent. With such the above figures, it can be seen that the European market accounts for a tiny proportion of the steel exports of Vietnam. Up to now, the EU- Vietnam Free Trade Agreement (EVFTA) has been approved by both sides with terms benefitting Vietnam’s export industries, including the steel industry, when enjoying an import tariff of zero percent following the commitment of the EVFTA.
Mr. Doan Danh Tuan, Chairman cum CEO of Toan Thang Steel Trading Company Limited shared that the company has never had any export activities to the EU market. However, with the advantages brought by the EVFTA, the company has had strategies to enter this market in the coming time.
According to experts, another advantage for Vietnam’s steel sheets and steel products is that there are export products of the EU and Vietnam that complement and do not compete directly with each other. Therefore, with the advantages that the EVFTA brings, the opportunity for the Vietnamese steel industry to export to the European market is huge.
The representative of Hoa Sen Group said that, at the end of May and the first half of June, the company has completed the export of 35,000 tons of galvanized steel sheets to Europe. Up to now, this is the largest steel sheet shipment of Hoa Sen Group and Vietnam exported to the European market, marking a milestone in the export of galvanized steel sheets of Vietnamese enterprises when proactively exploiting favorable conditions from the EVFTA. However, to bring products into this market, the group has built a long-term investment strategy for research activities and technical upgrades to improve product quality. Besides, it will improve production and supply activities for fast and timely delivery to customers in Europe. Like Hoa Sen Group, many steel enterprises such as Toan Thang, Ton Dong A, and Nam Kim Steel are improving product quality and service quality to meet the ISO 9001.2015 standard. This is the basic standard for Vietnamese steel products to export to Europe sustainably.
However, along with opportunities, there are also huge challenges. Over the years, the steel industry has suffered many trade remedy lawsuits from the US and ASEAN countries. Not to mention, in December last year, the US Department of Commerce levied import duties of up to 456 percent on some specific steel products from Vietnam, using raw materials originating from South Korea and Taiwan (China). Or most recently, the Australian Anti-Dumping Commission (ADC) announced that it would launch investigations of anti-dumping and anti-subsidy on some aluminum-zinc alloy-coated steel products originating from Vietnam.
In general, these lawsuits have caused the steel industry to suffer many losses, with the evidence of the declining export share of Vietnamese steel in the above markets. “Amid the tendency that safeguards will continue to increase in the coming time, enterprises must completely comply with the regulations on the transparency of the origin of production materials. Moreover, enterprises must improve technology to meet their standards,” said Mr. Vu Van Thanh, Deputy CEO of Hoa Sen Group.
According to Mr. Trinh Khoi Nguyen, Vice Chairman of the VSA, to ensure the transparency of origin, the steel association has made recommendations to member enterprises. The association has actively worked with the Ministry of Industry and Trade and commercial counselors to study the needs of export markets in general, and Europe in particular. Domestically, enterprises have increased investment in the production of raw materials to make the most of the preferential tax rates for products with pure Vietnamese origin. With imported raw materials, they are looking for supplies from countries that have signed FTAs with the EU or members of the EVFTA. This source of materials has a higher cost than raw materials imported from China but it is stable for steel enterprises.
By Minh Xuan – Translated by Bao Nghi
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