Vietnam steel magnate says excessive imports threaten domestic production

Rising steel imports are threatening domestic production, said Tran Dinh Long, chairman of Vietnamese steel producer Hoa Phat Group.

Countermeasures are needed to cope with excessive imports of hot-rolled coil (HRC), Long said at Hoa Phat Group’s AGM in Hanoi last Thursday.

Vietnam imported over 13.3 million tons of iron and steel worth $10.4 billion in 2023, up 14% but down 12.6% year-on-year, respectively. The average price was $782 per ton, down 23.3% against 2022, according to the General Department of Customs.

With 8.2 million tons of iron and steel worth more than $5.65 billion, up 62.8% and 13.9% respectively, China accounted for 62.1% and 54.2% of Vietnam's total volume and value.

This situation prompted two steel majors in Vietnam, Hoa Phat Group and Formosa Ha Tinh Steel Corporation (FHS), to petition the Ministry of Industry and Trade's Trade Remedies Department in March 2024.

Concerned that low-cost imported HRC was flooding the domestic market and affecting domestic manufacturing, the trade ministry directed the opening of an anti-dumping investigation on imports.

“The volume of steel being imported is too large. If there are no measures, it will endanger domestic production. Countries with huge domestic investments in steel production should not allow massive imports. During a 2023 survey, total steel production by Hoa Phat and Formosa was 6.7 million tons, but the total import volume was 9.6 million tons,” Long said.

Long noted that when steel imports reached 10%, the U.S. promptly applied Section 232 of the Trade Expansion Act on national security, in addition to anti-dumping duties. Under Section 232, the president has broad power to adjust imports - including through the use of tariffs - if excessive foreign imports are found to be a threat to U.S. national security.

In Thailand, when imports made up 60%, anti-dumping duties were levied to safeguard the HRC production sector. Similar measures were taken by Indonesia, when imports hit 37%, Long added.

On March 26, Hoa Phat declared that it would suggest opening an anti-dumping inquiry into HRC goods imported from China for three reasons.

First, China's selling price of HRC dropped from $618 per ton in Q1/2023 to $557 per ton in Q4/2023, indicating evidence of dumping.

Second, the quantity of HRC imports from China to southern Vietnam increased significantly; and third, some Chinese companies were competing unfairly with Vietnamese companies by selling HRC to Vietnam at a very low cost.

That day, general director Nguyen Viet Thang told investors at the Hoa Phat Dung Quat complex in Quang Ngai province that competing with Chinese steel has been a top priority for the firm since early days.

A week earlier, Hoa Phat and Formosa proposed the imposition of anti-dumping taxes on HRC steel from China, Thang said.

"As far as Hoa Phat is concerned, our position is straightforward. We will urge relevant agencies to assist the homegrown manufacturing sector if we see indications of dumping. We think the government will support us, as steel is the industry's backbone," he added.

Hoa Phat’s imposition prompted a strong reaction from a group of nine galvanized corrugated iron and steel pipe firms. This group argued that an increase in the amount of HRC imported from China to Vietnam is unavoidable because domestic supply does not match demand.

They insisted that, under the law of market supply and demand, any country that can make high-quality HRC at a fair price will export more HRC than others. In 2023, HRC products manufactured by Chinese companies had good quality and reasonable costs, therefore, HRC imported from China expanded more than HRC imports from other countries, which was entirely suitable and in compliance with market supply and demand laws.

Furthermore, the group said the ideas of "price reduction" and "dumping" are fundamentally different, so there is no legal foundation for proposing an anti-dumping investigation. The objective consequence of whether the global HRC selling price rises or falls is determined by the market mechanism's law of supply and demand.

The group also believed that Hoa Phat's argument that some Chinese businesses sell HRC to Vietnam at a loss is unfounded.

They believe that in order to know whether HRC manufacturing enterprises in China are selling HRC products at a loss or below the cost of HRC products to Vietnam, detailed data on the HRC production costs of Chinese enterprises is needed. It is impossible for any Vietnamese enterprise to access the accounting records of Chinese enterprises to know how much the HRC production costs of Chinese enterprises are because this is confidential information about each enterprise.

The above firms also requested that no investigation be conducted, claiming that the dumping margin is merely 1.26%, despite the fact that the Foreign Trade Management Law states that anti-dumping measures should not be implemented for imported goods with a margin not exceeding 2% of the price of products sent to Vietnam.

In the most recent developments, a group of 12 Vietnamese galvanized steel and steel pipe enterprises (accounting for 85% of the market share of the Vietnamese galvanized steel industry) has sent an official dispatch to confirm that Hoa Phat Group or one of its subsidiaries lacks the legal standing to file an application to initiate an investigation and impose anti-dumping duties on HRC imported from China.

Citing customs data, the group of 12 claimed that five subsidiaries of Hoa Phat Group imported HRC from China between January 1, 2019 and February 29, 2024, including Hoa Phat Steel Pipe Co., Ltd., a branch of Hoa Phat Steel Pipe Co., Ltd., Hoa Phat Binh Duong Steel Pipe Co., Ltd., Hoa Phat Da Nang Steel Pipe Co., Ltd., and Hoa Phat Cold Rolled Steel Co., Ltd., with a total of 576,305 tons. These HRC steel grades are totally within Hoa Phat Group's production capacity, and Hoa Phat sells them in both domestic and foreign markets.