Hoa Phat president Tran Dinh Long has announced a strategy on focusing on HRC (hot rolled coil) manufacturing.

Hoa Phat has recently signed an MOU on a study to invest in three projects with total investment capital of VND120 trillion in Phu Yen province. Of the three, Hoa Phat Cast Iron and Steel Complex in Hoa Tam Industrial Zone (IZ) is the largest with investment capital of VND80 trillion.

The manufacturer now can put out 8.5 million tons of raw steel per annum, the highest capacity in Southeast Asia, with complexes in Hai Duong, Quang Ngai and Hung Yen. This includes 5.5 million tons of ingot steel, structural steel and 3.5 million tons of HRC.

Mentioning the project in Phu Yen, Long said the steel mill will focus on high-quality HRC with a designed capacity of 6 million tons a year.

Once the project in Phu Yen and the Hoa Phat Dung Quat Complex No 2 in Quang Ngai are completed, Hoa Phat’s steel manufacturing capacity will rise to 20 million tons a year, including 14.6 million tons of HRC and 5.4 million tons of structural steel and high-quality coil.

The recent moves taken by the ‘Steel King’ show that the billionaire wants to turn Hoa Phat into a high-quality steel enterprise. Hi-tech HRC accounts for 72.6 percent of Hoa Phat’s total output, helping ease reliance on imports.

Domestic HRC output remains modest compared with demand because there are only two suppliers, Formosa and Hoa Phat. Formosa is a Taiwanese enterprise, while Hoa Phat remains the sole Vietnamese manufacturer.

The Vietnam Steel Association reported that 6.8 million tons of HRC were sold in 2023. According to the General Department of Customs, Vietnam imported 8 million tons of HRC.

Vietnam still relies heavily on HRC imports, which also means great opportunities for domestic enterprises to invest in HRC production.

The reports from the Ministry of Industry and Trade on the situation of the steel industry mentioned the shortage of domestically manufactured HRC. It cited statistics as showing that domestic mills can put out 5-6 million tons a year, and Vietnam imports 10 million tons of steel of this kind each year.

The ministry said from now to 2025, even when Hoa Phat Dung Quat No 2 complex becomes operational, with the capacity of 5.6 million tons of HRC, Vietnam will still have to import a large amount of HRC to satisfy domestic demand.

The ministry applauds Hoa Phat’s plan to build more HRC mills, saying that the increased HRC output will help Vietnam satisfy domestic demand for HRC. 

This will also help restructure the steel industry, which now mostly produces structural steel (80 percent) used for making concrete reinforcement, roofing and covering panels, and factory structures.

The recovery of Hoa Phat share prices has helped Hoa Phat president Tran Dinh Long’s assets increase sharply. Analysts predicted that the assets of the ‘Steel King’ may increase by twofold to $5 billion, if Hoa Phat’s profits increase as expected. Long now has $2.4 billion as of February 24 as reported by Forbes.

Hoa Phat share prices have soared from VND22,800 per share in late October 2023 to VND29,000.

Other steel manufacturers are expected to see their business prosper in 2024, partially thanks to public investments for infrastructure projects in the pipeline, including the Long Thanh International Airport, highways and belt roads in Hanoi and HCM City.

A recent report by SSI Research predicted that steel demand would recover in 2024 with estimated growth rate of over 6 percent compared with last year.

Vietnam’s economy has shown signs of recovery and is expected to obtain a higher growth rate this year. Vietnam’s export turnover soared in the first month of the year. 

Analysts also can see positive signs from the real estate market. The three amended laws related to real estate and loosened monetary policy are two important factors to help the property market recover.

As share prices are increasing, many investors have registered to sell steel shares to take profit. Nguyen Ngoc Quang, a member of Hoa Phat board of directors, has registered to sell 1 million shares with transactions to be carried out from March 11 to April 9.

Luong Bang