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Exports will save Vietnam’s steel industry

The steel exports have been increasing steadily over the last few years, which is believed to be the way out for the domestic oversupply. The steel exports have always been higher than 2 million tons per annum since 2010.

VietNamNet Bridge – The steel exports have been increasing steadily over the last few years, which is believed to be the way out for the domestic oversupply. The steel exports have always been higher than 2 million tons per annum since 2010.



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A report by the Vietnam Steel Association (VSA) showed that only 50 percent of the total steel output was consumed in 2013. The steel industry experienced another tough year 2013 with sale getting stuck due to the economic crisis.

However, the industry still can put a high hope on the exports which have been increasing rapidly. In the first 11 months of 2013, Vietnam exported 2.6 million tons of steel, higher than the 2.15 million tons in 2012. Galvanized steel sheets and color coated products saw the sharpest exports increases.

What can Vietnam export?

While the sale of galvanized steel products tends to grow well, the consumption of welded steel pipe and cold rolled steel products has been on the decrease.

Cold rolled steel is the input material for making consumer and industrial goods. Posco Vietnam, a subsidiary of Posco Group, has been leading the market over the last many years with 84 percent of the output and 99 percent of exports.

The pipe steel saw a considerable export decrease in 2013 after a robust year 2012 due to the anti-dumping tax imposed by some markets.

There are a lot of pipe steel manufacturers, but the market is believed to be dominated by SeAH Vietnam, a subsidiary of South Korean SeAH Steel Corp with 58 percent of the market share.

Meanwhile, a Vietnamese enterprise, Hoa Sen Group, has been dominating the galvanized steel which makes up 47 percent of the exports.

Big guys have big advantages

Analysts commented that Posco Vietnam or SeAH Vietnam can have big output and big export volume because they have big competitive edges, especially the support from the foreign holding companies.

Posco Vietnam now possesses the biggest cold rolled steel mill in South East Asia, i.e. it has very few competitors in the region.

As for SeAH Vietnam, with the advanced technologies, it can export products to the big markets like the US, Japan which are always very demanding in quality.

In the field of galvanized iron production, Hoa Sen can enjoy the advantage of the large distribution network covering in many provinces and cities.

It’s not the right way for small enterprises to follow

Most of the steel products made in Vietnam have a medium quality, while it is very difficult to penetrate the choosy markets like the US, Japan or the EU. Even the big manufacturers like Posco and SeAH find it difficult to boost exports to the big markets due to the stiff competition and the trade barriers.

Vietnam’s stainless pipe steel, for example, has been imposed the anti-dumping duties in the US and Brazil.

Hoa Sen Group, which understands this well, has been trying to develop regional markets instead of far and choosy markets. The free trade agreements would pave the way for Vietnamese manufacturers to export steel products to the markets.

However, analysts still believe that following the export-oriented business strategy is not the right way for small enterprises. Only the big manufacturers with great advantages can win the stiff competition. This partially explains why the biggest exporters are the enterprises in the south, where there are deep water seaports such as Cai Mep – Thi Vai and Cat Lai.

TBKTSG

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