“No country in the world accepts large steel import volume which is even higher than domestic production output,” Tran Dinh Long, president of Hoa Phat Group, told a shareholders’ meeting held on April 11 when asked about the massive imports of HRC into Vietnam.

According to the General Department of Customs (GDC), in 2023, HRC imports were 143 percent of domestic HRC output. In the first three months of 2024, Vietnam imported 3 million tons of HRC, or 150 percent of domestic output. 

Imports from China and India soared, accounting for 75 percent of total imports.

Hoang Ngoc Thuan from the Foreign Trade University (FTU) confirmed that HRC imports have increased too rapidly over the last two years. 

In 2021, Vietnam imported 7.5 million tons of HRC and in 2023, the figure rose to 9.6 million tons. The 2 million ton increase means the 25 percent increase, which is a worrying sign for Vietnam’s steel industry.

If total domestic demand doesn’t increase, the sharp import increase will have a big impact on the industry and the economy, causing domestic steel mills to lose the home market.

In the 2022-2023 period, domestic steel output increased by 1 million tons, but the output increase was not associated with the domestic market share increase. 

Statistics show that in 2022-2023, domestic manufacturers lost 1.5 million tons in the domestic market (domestically consumed volume of domestic manufacturers dropped from 4.9 million in 2022 to 3.4 million in 2023). The market share lost by domestic manufacturers was filled by imports.

Massive imports will affect domestic production and cause both short-term and long-term consequences. If domestic steel manufacturing is exterminated, Vietnam will have to rely on imports in the future. In other words, Vietnam cannot control HRC output and prices, and domestic HRC manufacturing won’t be able to develop.

If domestic production is eliminated and Vietnam has to rely on HRC imports, this will be dangerous. Steel is an important product for many other industries, especially ones related to national defence.

Worrying about the flood of HRC imports in the domestic market, some large steel manufacturers have called on the Ministry of Industry and Trade (MOIT) to apply trade remedies to protect domestic production.

Thuan said in theory anti-dumping duties will be imposed if there are three factors.

First, there must be dumping of imports (in this case, it is HRC in the Vietnamese market). If there is dumping and a high dumping margin, the investigation agency needs to examine this.

Second, there must be serious damages, or threatened serious damages to domestic production, as dumping may prevent the formation of domestic industries. Statistics in 2022-2023 show that domestic production was adversely affected by imports. 

It is necessary to measure the damage caused by dumping activities, such as value and sale volume, market share, output, profits, capacity and selling prices, to find out if domestic manufacturing is damaged and if the damages are exceptionally high. In this case, the loss of one-third of market share is really worrying.

Third, there must be a cause and effect relationship between the behavior of dumping of HRC and domestic production. In this case, the considerable increase in imports and corresponding decrease in domestic manufacturers’ market share is a sign for considering the cause and effect relationship.

Thuan of FTU said if Vietnam can prove the existence of these three factors, it can initiate investigations against imports to protect domestic production.

However, if trade remedies are applied to restrict imports, this could lead to a monopoly in the domestic market, which may affect consumer benefits.

Thuan said that protectionism may create certain advantages for domestic enterprises. However, it is necessary to look at the situation from different angles. First, if domestic production cannot be protected, it may be put in danger. Second, trade remedies are just temporary measures applied for a short time, so they can’t create long-term advantages to domestic enterprises.

Luong Bang