VietNamNet Bridge - Steel mills now have to struggle to compete with imports from China. If the Ministry of Industry and Trade (MOIT) does not take temporary safeguard measures, a series of enterprises will go bankrupt.


A report of the ministry said that in January 2016, Vietnam churned out 364,500 tons of raw steel, a decrease of 7.1 percent compared with the same period last year. Meanwhile, the imported volume increased by 33.9 percent.

The imports from China remain a headache for domestic steel enterprises. Chinese enterprises have increased exports to Vietnam to ease domestic oversupply, accepting to sell products at below production costs.

Meanwhile, under the ASEAN-China Free Trade Agreement (FTA), the import tariff on alloy steel will be cut to zero percent, which will pave the way for more steel to enter Vietnam. 

Under the ASEAN-China Free Trade Agreement (FTA), the import tariff on alloy steel will be cut to zero percent, which will pave the way for more steel to enter Vietnam.

This has put Vietnamese enterprises on tenterhooks. The domestic steel output alone is more than enough to satisfy domestic demand. 

But Chinese imports have been increasing rapidly.

Therefore, domestic steel mills repeatedly urged MOIT to take safeguard measures to rescue the steel industry, which is in danger.

In mid-December 2015, MOIT, amid urging by steel mills, decided to conduct an investigation to apply safeguard measures against ingot steel and long steel products made of import ingot steel.

Do steel mills really want investigations?

While the MOIT’s decision on an investigation to apply safeguard measures pleased some enterprises, others have voiced their disagreement with the decision, warning that this will make steel prices increase.

Steel enterprises are divided on the issue. Steel laminating mills don’t want safeguard measures to be applied because they only laminate steel from imported ingot steel, while they do not make ingot steel domestically.

The Vietnam Steel Association’s deputy chair Nguyen Van Sua said once safeguard measures are applied, ingot steel would become more expensive. If so, steel manufacturers would have to pay higher for production costs.

Analysts estimated that one ton of Chinese ingot steel was imported at the price of $320 on average, which was VND2 million per ton cheaper than domestically made ingot steel. That was why ingot steel importers protested against safeguard measures.

Deputy Minister of Industry and Trade Do Thang Hai commented that the interest conflict was unavoidable. If safeguard measures are applied, steel laminating enterprises would suffer. If not, ingot steel manufacturers would be put at a disadvantage.

In principle, MOIT needs to make a decision which benefits the majority of enterprises and the national interest.

Analysts said that if ingot steel imports remain cheap, enterprises would rather import products than make them domestically. And if so, Vietnamese would rely on imports, which is dangerous for domestic production.