The 2023 newly released annual report of Formosa Plastics Group showed that its subsidiary in Vietnam, Formosa HaTinh, incurred a loss of 20.1 billion Taiwanese dollars ($615 million). It took a profit last year, though revenue decreased slightly by 3.2 percent.

Explaining the heavy loss in 2023, Formosa Ha Tinh said the steel manufacturer had to slash selling prices to compete with other products, though input material prices decreased insignificantly.

In 2022, Formosa Ha Tinh also took a loss of 10 billion Taiwanese dollars.

As such, the total amount of loss in the last two years has totaled 30 billion Taiwanese dollars ($900 million). In 2021, it made a profit of 33 billion Taiwanese dollars, or $1 billion.

The loss incurred by Formosa Ha Tinh has directly affected the provincial budget collection, because this is the biggest foreign-invested enterprise in the province. Formosa Ha Tinh made an investment in the locality in 2008 with charter capital of $5.5 billion and total investment capital of $12.8 billion.

Ha Tinh in 2023 reported a decrease in budget collection compared with 2022. In the first half of 2024, Ha Tinh’s tax collections from the foreign-invested sector were low, mostly because of the tax collection fall from Formosa.

During the fiscal year, Formosa Ha Tinh spent to overhaul its production line. Cheap imports from China and India also affected domestic manufacturers.

Not only Formosa HaTinh but all steel mills in Vietnam and globally faced difficulties in 2022-2023 due to a decline in global demand, especially in China.

China's real estate market has become quiet in recent years, which has led to a steel consumption decline. Many multinationals in the country have slashed selling prices and tried to boost exports, including to Southeast Asia.

Most steel manufacturers in Vietnam reported unsatisfactory business results in 2022. Hoa Phat Group, owned by billionaire Tran Dinh Long, for example, reported a loss of VND1.8 trillion in the third quarter and VND2 trillion in the fourth quarter. A number of other manufacturers also reported continued losses.

The situation was still sluggish in 2023, when Hoa Phat made a modest profit of VND383 billion in the first quarter, much lower than the profit of VND7-10 trillion each quarter in 2021. Hoa Phat has seen its profit increase since the third quarter of 2023.

Also in the third quarter 2023, Hoa Sen (HSG) owned by president Le Phuoc Vu reported an impressive profit. 

However, the number of enterprises incurring losses was still higher than the number of profitable enterprises. 

Vicasa-VNSteel (VCA), Thu Duc Steel (TDS), Nha Be Steel (TNB), Thai Nguyen Cast Iron and Steel (TIS), VNSteel-HCM City Metal Corporation, Vietnam Steel Corporation (TVN), SMC Trading Investment JSC and Cao Bang Cast Iron and Steel JSC (CBI) all reported losses.

Hoa Phat reported sharp profit increase for the third quarter of 2023 compared with the same period of the previous year, but a 9-month period was still in the bottom 8-year area.

In 2023, Tisco, the oldest steel manufacturer in Vietnam, took a loss of VND200 billion, the highest level in its history.

The situation improved in the first quarter of 2024, but not all steel manufacturers reported good news. Pomina (POM) still could not escape crisis with a loss of VND225 billion in the first three months, or the eighth consecutive unprofitable quarter. Meanwhile, TVN, TDS and VCA saw profits drop sharply.

The future of the steel industry

Analysts say that domestic enterprises were still facing difficulties in the first quarter 2024, including weak demand amid the real estate market gloom, low public investment, strong inflow of cheap steel from China, and exchange rate fluctuations.

However, the situation became less serious in the first quarter this year. Large steel mills have reported positive signs. HPG made a profit of VND2.9 billion, seven times higher than in the same period last year.

Stock market observers have noted that steel share prices soared following news that Vietnam had conducted an anti-dumping investigation against imported galvanized steel products from China and South Korea.

Manh Ha