Ministry of Industry and Trade imposes safeguard tax to block cheap Chinese steel

The official safeguard tax rates applied in the first year to steel billets and long steel imported into Vietnam are 23.3% and 15.4%, respectively.

After a period of temporary self-defense tax application, the Ministry of Industry and Trade has decided to officially apply self-defense measures on steel billets and long steel imported into Vietnam from now until the end of March 2020.

Specifically, imported goods subject to safeguard measures include alloy and non-alloy steel billets; alloy and non-alloy long steel products (including steel coils and steel bars) imported into Vietnam.

The additional import tax rate on steel billets imported into Vietnam will be 21.3% for one year, from March 22, 2017 to March 21, 2018. This tax rate will be reduced to 19.3% and 17.3% in the following years, and from March 22, 2020 onwards, the tax rate will be 0%.

Cheap Chinese steel is being imported into Vietnam in large quantities, causing domestic manufacturing enterprises to lose market share.

For long steel products, the first year's official safeguard tax will be 15.4% from August 2, 2016. From March 22, 2017 to March 21, 2018, the tax rate will decrease to 13.9%; the following years, the tax rates will be 12.4% and 10.9%, respectively. If the management agency does not extend, the tax rate will decrease to 0% from March 22, 2020 onwards.

The basis for applying the safeguard measure cited by the Ministry of Industry and Trade is that the volume of imported steel billets and long steel has increased sharply in both absolute and relative terms recently. Meanwhile, domestic enterprises producing these two products are fully capable of meeting half of the market demand.

“The increase in imports is the cause of serious damage to the domestic manufacturing industry, such as reduced market share, capacity, revenue, profit, increased inventory, etc. Along with that, excess capacity as well as actual output combined with large inventories of Chinese steel products are considered 'unpredictable developments' and are the cause of the sudden increase in the amount of steel billets and long steel imported into the Vietnamese market", the Ministry of Industry and Trade assessed.

The agency also said that after the safeguard measure officially takes effect, the General Department of Customs will collect additional import tax on goods subject to the tax.

Starting from December 2015, the Ministry of Industry and Trade issued Decision 14296 on the investigation of applying safeguard measures on steel billets and long steel imported into Vietnam from many different countries and territories. Three months later, this agency issued Decision 862 applying temporary safeguard measures on steel billets at 23.3% and long steel at 14.2% in the form of additional import tax.

A report from the Vietnam Steel Association (VSA) said that steel consumption in June reached more than one million tons, down nearly 12% compared to May. According to Mr. Nguyen Van Sua, Vice President of VSA, the consumption of long construction steel decreased by 8.7% compared to the same period last year and decreased by 18.4% compared to May due to seasonal demand reduction and traders minimizing inventory to minimize risks in the trend of rapidly falling prices.

In June, raw material prices also decreased by 15-20 USD per ton for scrap and billet steel, while finished steel prices dropped sharply from 800,000 to 1 million VND per ton due to fierce competition for market share.

Currently, the actual selling price at the source (excluding VAT, delivered at the factory, minus maximum discount) depends on the specifications, product types, and manufacturers, with common rebar steel commonly priced at 9.3-9.7 million VND per ton; rolled steel at 9.3-9.9 million VND per ton...

According to VNE