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Chinese steel finds Vietnam a safe heaven amid trade war

A potential full-blown trade war between China and the US has prompted Chinese steel firms to move parts of their manufacturing to other markets, including Vietnam, according to the Nhip Cau Dau Tu magazine. 

Chinese steel producers are planning to distribute their production capacity to other countries.

In Vietnam’s Dong Nai province, after one year of being rejected, Yongjin Metal – a China-based steel firms has resent its application for a project of stainless cold rolled steel with an annual capacity of 300,000 tons.

Apart from this, many other Chinese steel manufacturers have increasingly planned to penetrate Vietnam market.

Meanwhile, Vietnam’s steel imports from China keep climbing. The country imported nearly 2.74 million tons of steel worth US$1.49 billion in the first two months of 2018, a 62% increase year-on-year. Of the figure, volume from China accounted for 1.53 million tons worth US$786 million.

Also, the consumption of steel in Vietnam remains high. Increased investment of big auto groups like Toyota, Mitsubishi, Thaco and VinFast also boosts the demand of high-quality steel.

Besides, Chinese steel firms in Vietnam can find motivation from increasing presence of the Chinese construction companies including CSCEC, Tung Feng, most of which have won bids for many key projects in Vietnam during the past time.

Actually, Chinese companies have planned to shift their production to Vietnam for years, Max Brown, Business Intelligence Manager of Dezan Shira in ASEAN said. Yet the threat from trade war pushes them more, he added.

Nevertheless, the shift of Chinese steel can pose new risks to Vietnamese steel firms, who are still protected  under the umbrella named “safeguard tariffs” that Vietnam has imposed on steel imports since 2016.

The Vietnam Steel Association (VSA) promptly reacted to the new move of Chinese firms. The association has requested the government not to issue new investment licenses for projects that will worsen overcapacity.

“We consent with the proposal from domestic stainless steel producers that not give license to project of Yongjin Metal to avoid the overcapacity in domestic supply,” the VSA said.

Side effects

Moreover, Vietnam can confront side-effects from China’s effort to sell its steel to other countries under the cover of “Made in Vietnam steel”.

On June 12, some US-based steel producers filed an inquiry into anti-dumping and anti-subsidy measures to the US Department of Commerce (DOC) for corrosion-resistant carbon steel imported from Vietnam due to suspected tax evasion from Taiwan and South Korea and cold-rolled steel imported from Vietnam on suspicion of evasion tax from Korea.

The department will decide whether or not to initiate an investigation within 45 days of receiving the application (scheduled July 27). If DOC decide to impose safeguard duties, Vietnamese steel sector can face a loss of sale adequate for 11% of its total export in 2017.

Hence, some Vietnamese enterprises are supposed to stop importing the hot rolled coil from China to avoid the eyes of DOC.

Vietnam’s steel industry is forecast to grow by 20-22% in 2018, according to the VSA. Of the figure, strongest growth will be seen in the production of hot rolled steel with 154%, followed by welded steel pipe (15%), coloured galvanished steel (12%), construction steel (10%), and cold rolled steel (5%).

Hanoitimes 


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