Vietnam’s steel imports hit record high in 2016

Vietnam’s steel imports increased 18.4% to a record high of 18.4 million tons last year, while its steel exports soared 36% to 3.5 million tons, customs data showed.

Accordingly, its steel trade deficit widened to 14.9 million tons or US$6 billion in 2016.

The trade ministry estimated the country will spend US$15 billion annually on steel imports by 2020 to meet rapidly rising domestic demand. The ministry also forecast Vietnam will be short of 15 million tons by 2020 and 20 million tons by 2025.

As a construction boom spurs steel demand across Southeast Asia, countries such as Vietnam, Indonesia and Thailand are challenging a flood of imports from China by retooling their steelmaking technology or imposing tariffs. Photo by Reuters

Statistics show that Vietnam’s steel imports so far meet up to 60% of the market demand.

Faster economic growth means more steel is needed to make everything from cars to buildings.

Given gross domestic product growth of 6.2% last year, the country’s rising steel demand will boost production by 10%-12% in 2017.

Vietnam’s per capita steel consumption could grow further in the next few years from just below 300 kilograms today, said industry experts.

“The country has ample reserves of iron ore but its manufacturing sector, arms industry and shipbuilding businesses are fully reliant on steel imports,” said Truong Thanh Hoai, a senior official at the trade ministry.

The Southeast Asian country plans to put as many as 10 steel projects into operation this year in an attempt to reduce its high dependence on Chinese steel imports.

More than half of Vietnam’s total steel imports in 2016 came from China. Customs data showed that the Southeast Asian country imported 10.85 million tons from its neighbor last year, a 14.3% increase from the year before, with a value of US$4.45 billion.

Nguyen Van Sua, chairman of the Vietnam Steel Association, said this year the steel industry will remain under mounting pressure of cheap steel inflows mainly driven by Chinese overcapacity.

He said the government should continue to shield domestic steel makers from a detrimental surge in steel imports by imposing safeguard duties.

“Chinese steel imports mainly came from manufacturing facilities along the southern coastal provinces,” said Thanh Hoai, explaining that as Chinese steel imports are transported by sea, lower transport costs make Chinese steel more competitive than Vietnamese products.