Vietnam Steel Faces Trade Defense Challenges

2016 is predicted to be another difficult year for the steel industry, as the risk of cheap imports, especially from China, will continue to flood into Vietnam.

Checking the quality of steel coming out of the furnace at the steel rolling mill of Thai Nguyen Iron and Steel Joint Stock Company.

Along with that are challenges from trade defense measures from export markets.

In fact, using self-defense measures is something that businesses need to strongly apply in the conditions of trade liberalization.

But how to protect ourselves to ensure the harmony of interests between businesses is something that needs to be calculated and considered.

Do not avoid trade defense

According to the Vietnam Steel Association, in 2015, the steel industry grew in all aspects, from production to consumption. Production of steel products reached nearly 15 million tons, up 21.5% compared to 2014; consumption reached nearly 17.9 million tons (including imported steel), up 26% compared to 2014.

However, in general, in 2015, the steel industry had to “suffer” when facing trade defense lawsuits from export markets. At the same time, it had to witness the influx of a large volume of imported steel into Vietnam; in which, with 12 defense and anti-dumping lawsuits in 2015, the export turnover reached about 2 billion USD/9 billion USD in the import direction.

In terms of quantity, Vietnam also only exported a total of more than 2.8 million tons of steel of all kinds/more than 13 million tons of imported steel...

Entering 2016, with the opening of the export market, the Vietnamese steel industry will have more opportunities to bring products to other countries and that is the reason why the steel industry boldly sets a growth target of about 15-20%.

However, according to Mr. Nguyen Phuong Nam, Deputy Director of the Competition Management Department, Ministry of Industry and Trade, an imminent threat is that when we boost exports, importing countries will see the risk of threatening their manufacturing industry, so they will step up defense measures.

Even ASEAN countries such as Malaysia, Thailand, Indonesia... have repeatedly sued Vietnam for trade defense.

Faced with this risk, Mr. Nam said that although Vietnamese businesses are not yet strong and experienced enough, they still have the ability to fight.

But the important thing is that when foreign agencies apply trade defense measures, businesses must have a high spirit of cooperation, be persistent, and not avoid them. If they avoid them, the foreign defense agency will have the right to apply them immediately because we are not cooperating.

Adding to this issue, Mr. Ho Nghia Dung, Chairman of the Vietnam Steel Association, said that businesses also need to build a professional team to be ready during the investigation process, standardizing data, not only to serve foreign investigation agencies but also to serve the businesses themselves, when requesting the Competition Management Department to apply trade defense measures to protect the production of their industry.

Consider to harmonize interests

The idea that the business community must be more proactive in trade defense is not a new story, especially for the steel industry, because 2015 was the year this industry struggled because of cheap imported steel, causing headaches for many businesses.

According to Mr. Ho Nghia Dung, in more than 13 million tons of steel imported in 2015, there were items that could be produced domestically, not to mention some signs of trade fraud.

Specifically, 1.7 million tons of billet were imported, an increase of 200%, while domestic production capacity was 12 million tons per year, currently output is about 6 million tons/year. Imported rolled steel was 1.6 million tons, while domestic production was 1.1 million tons...

​In the face of the sudden and unusual increase in imports of steel billets and long steel products, causing serious damage to the steel industry, many steel enterprises have submitted applications to the Competition Management Department requesting the application of self-defense, with the proposed temporary tax rate for steel billets being 45% and 33% for long steel products. This is also the second time Vietnam has proactively filed a trade defense lawsuit.

However, for some businesses, trade defense lawsuits are affecting their interests.

Mr. Le Minh Hai, Chairman of the Board of Directors of Viet Duc Steel Pipe Joint Stock Company, said that he agrees with trade defense when billet factories are at risk, have excess products and are not enough to meet general demand.

But currently this product is not enough to meet the demand, so there is no reason why businesses cannot import cheap raw materials and have to buy domestically, while buying domestic steel billets is difficult.

Citing this, Mr. Hai said that in 5 years of steel production, the company was only able to buy less than 50,000 tons of billets from Hoa Phat, and 100,000 tons from the Vietnam-China-VTM Minerals and Metallurgy Joint Venture Company (Lao Cai).

Thus, the amount of domestic billets is currently not enough to meet the demand, the enterprises producing these billets are only enough to meet their steel production; enterprises cannot demand that Hoa Phat or Viet Trung sell to them.

Most recently, Viet Duc Steel Pipe Joint Stock Company continuously asked to buy, but the Vietnam-China-VTM Mineral and Metallurgy Joint Venture Company said there was no goods, and at the earliest it would be available in March.

Not to mention, "just as trade defense measures were being put in place, the price of steel billets in the market increased from 6.5 million tons to 7.2 million tons" and businesses were forced to raise prices, which made consumers suffer, Mr. Hai said.

According to Mr. Hai, trade defense measures are necessary and legitimate, but when to apply them, the Steel Association and businesses in the same industry should discuss again to reach a consensus, because the interests of one business affect the interests of another; propose a reasonable tax rate, but cannot propose a tax rate of over 40%...

Currently, the import tax on blanks is 9%, so if it is raised, it can be proposed to be raised to 15-16% to ensure common interests.

Sharing the same view, Mr. Vu Phong, Chief Representative of Pomina in the North, said that in 2015, over 600,000 tons of billets were cast.

The product has the ability to compete well with Chinese steel billets because scrap steel prices are continuing to fall. “We support the opinion of Viet Duc Steel Pipe Joint Stock Company that in this anti-dumping lawsuit, the association should consider carefully how to prevent steel units from facing difficulties,” Mr. Phong suggested./.

According to Vietnam+