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China’s dumping leaves Vietnam steel plants fighting for survival

 VietNamNet Bridge – Steel making in Vietnam is in danger of coming to a full stop and the root cause of its demise lies in the fact China is increasingly dumping vast stockpiles of steel in markets around the globe say leading market analysts.

VietNamNet Bridge – Steel making in Vietnam is in danger of coming to a full stop and the root cause of its demise lies in the fact China is increasingly dumping vast stockpiles of steel in markets around the globe say leading market analysts.


To make matters worse, these same analysts and others in the steel industry are sounding the alarm over the increase in the number of anti-dumping investigations initiated against Vietnamese manufacturers.

Of particular note, Thailand has initiated three investigations in September on steel sheets and related products. However, this is just the latest in a long string of investigations that other nations have instituted.

Deputy General Director Ho Quang Thiep of Southern Steel Sheet Company (SSSC), said companies in the industry are experiencing the negative effects of China infiltrating international markets with low cost steel and these investigations.

“Demand is low and inventory levels excessively high,” Thiep said. Inventories currently are at levels nearly double the total of last year’s annual domestic demand, which spells trouble for steel makers in the industry.

Thiep stressed that companies are looking at high stockpiles of inventories, low demand and are adjusting production levels downwards. The major concern is a good chunk of business is being lost unfairly.

The government of Indonesia has levied an anti-dumping tax on imports of cold-rolled steel sheets from July 7, 2014 to July 7, 2017, which has caused the sales prices of steel in the market to increase 40-50%.

With such a high tax rate many Vietnamese steel makers are contemplating walking away from the Indonesian market altogether.

With an average sales price of US$600-700 per metric ton, plus the tax, steel to Indonesia has to sell for more than $1,000 a metric ton to be profitable, much too high to compete with products from China, Thiep underscored.

A representative of another major steel company noted colour-coated steel sheet exports to Malaysia are also the subject of an investigation, with the dumping margin allegedly amounting to 13.68%.

"We are very worried it will be hard to export to this market again, because Malaysia will most surely impose a tax," the rep said.

According to the Vietnam Steel Association (VSA), steel makers produced nearly two million metric tons of zinc-coated and colour-coated steel sheets in the first eight months of the year, but only about 600,000 metric tons have been sold.

VSA Deputy Chairman Nguyen Van Sua said this year’s output is expected to be the same as last year at about 2.8 million metric tons, much less than the 4 million metric tons capacity.

Meanwhile, for the nine months leading up to September, official statistics from the General Department of Vietnam Customs show that steel imports surged 41.1% to 9.91 million metric tons with nearly 80% (or 8 million metric tons) coming from China.

Compared with China, Vietnam is a minnow in terms of steel production as Chinese mills have an installed capacity of 1.1 billion metric tons of metal per year, of which 340 metric tons is excess capacity.

Chinese import pressure and unfair trade practices are certainly among the root causes underlying the pressures that steel plants in Vietnam are facing as it now sells its excess steel to the US, EU and ASEAN markets at prices that do not even cover its cost for raw materials and material transformation.

The price of Chinese colour-coated steel sheets was about US$654.00 per metric ton, about US$146.75-US$235.69 cheaper than locally made steel sheets, even lower than domestic production costs.

Sua said VSA, together with steel makers are in the process of investigating claims to support the filing of lawsuits with the WTO regarding China’s dumping of unwanted steel onto world markets including Vietnam, pushing metal smelters to the brink of bankruptcy.




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