Vietnam's Hoa Phat Group to become Southeast Asia’s first producer of steel rails for high-speed railways

Hoa Phat Group, a top steelmaker in Vietnam, on Thursday signed an agreement with Germany’s SMS Group under which the latter will provide the former technology and production lines for manufacturing steel rails and shaped steel, with an annual capacity of 700,000 tons.

The production lines are scheduled for completion within 20 months, with the first high-speed rail products expected to roll out in the first quarter of 2027.

This investment will make Hoa Phat the only company in Southeast Asia capable of producing steel rails for high-speed railways.

The project features Europe’s most advanced production lines, utilizing a state-of-the-art four-roll rolling system. This system offers exceptional flexibility and precision and consistent quality, fully aligned with international standards for high-speed rail applications.

SMS Group will be responsible for designing, supplying, and installing the production lines for both steel rails and specialty steels of Hoa Phat.

The rolling process will include key stages such as bloom & beam blank furnace, rough rolling, multi-purpose reversible rolling, laser scanning for automated defect and contour detection, non-destructive testing (NDT) for steel quality, fine straightening for optimal quality, rail-end hardening system, and synchronous rail hole drilling system.

All core equipment will be manufactured in Germany under strict, synchronized quality controls to ensure compliance with requirements for high-speed rail production in Vietnam and international markets.

The output includes specialty steels that no other Vietnamese enterprise currently produces, such as steel for urban rail systems, crane rails, and high-speed railway tracks, as well as U, I, H, and V-shaped beams. These products are targeted at key national infrastructure projects and international exports.

Globally, only a few major steel producers are capable of manufacturing high-speed rail steel, including Voestalpine (Austria), JFE (Japan), Baosteel (China), and JWS Steel (Italy).

Leveraging its integrated steel production from low-impurity iron ore, Hoa Phat will be able to produce rails up to 100 meters in length, featuring exceptional straightness, flatness, and surface hardness.

Advanced technologies such as laser geometry measurement and ultrasonic defect detection will ensure product quality before market release.

The steel rails will meet the world’s most rigorous standards, including EN 13674 (Europe), JIS E1101 (Japan), and TB/T2344 (China), satisfying the demanding specifications of the transportation and heavy industrial sectors.

Hoa Phat Group chairman Tran Dinh Long noted that 90% of the world’s high-speed rail manufacturers currently use SMS Group's technology.

Hoa Phat has been strategically focusing on producing high-quality steel for the railway, oil and gas industry, mechanical engineering, and defense industry, helping to replace imported high-grade steel with domestic alternatives.

The group’s investment in rail, profile, and specialty steel production is part of its broader strategy to optimize its manufacturing chain and fulfill commitments to the Vietnamese government. This includes supplying steel for high-speed railway projects and other national infrastructure initiatives.

Bernhard Steenken, chief sales officer, Region APAC & MEA at SMS Group, commented, that SMS has delivered similar production lines to partners across the U.S., China, India, Europe, and the Middle East.

SMS Group is committed to delivering top-quality equipment and ensuring the project progress on schedule. With the production lines, Hoa Phat will become the first enterprise in Southeast Asia to produce high-speed rail steel and a variety of specialty steels that meet international standards, he added.

SMS is a global leader in metallurgical equipment with more than 150 years of experience in the steel and non-ferrous metal industries.

The group supplied the first rail plant equipment in 1990. The company has installed 14 high-performance production lines worldwide.

It has been a long-time partner of Hoa Phat. Previously, it provided key equipment for the Hoa Phat Dung Quat and Hoa Phat Hai Duong steel complexes.

Reflecting on the North-South high-speed railway project, Long said Hoa Phat was quick to answer the government’s call to manufacture components for this future project.

“When we consider suppliers, we prioritize seeing their work on the ground - what countries they’ve served and the quality of their projects. We chose SMS Group after studying large-scale developments in countries like France, Spain, and China.

Vietnam's leading private conglomerate Thaco Group has proposed to invest in the North-South high-speed railway project in Vietnam, following a similar proposal from heavyweight Vingroup.

In a proposal submitted to Prime Minister Pham Minh Chinh on May 27, 2025, Thaco said that of the $61.35 billion in investment capital, 20% will come from its equity and the remaining from foreign and domestic loans.

Previously, on May 15, VinSpeed High-Speed Rail Investment and Development JSC, a subsidiary of private conglomerate Vingroup, had announced its registration to invest in the project.

Hoa Phat Group plans to invest VND14 trillion ($541 million) in a factory to produce steel for railway infrastructure. The plan was unveiled by Hoa Phat’s chairman Tran Dinh Long at the 2025 AGM on April 17, 2025.

This move comes in response to the Prime Minister’s call for Hoa Phat to manufacture rail steel last September, as Vietnam accelerates the development of major railway projects, including the giant North-South high-speed railway, Long said.

The new plant will be located within the Hoa Phat Dung Quat 2 Iron and Steel Production Complex in the central province of Quang Ngai, with the first products expected to be rolled out by May 2027, he noted.

In 2025, the group plans to achieve a target revenue of VND170,000 billion ($6.54 billion), up about 21% compared to 2024's actual figure, and a record high.

The target for 2025 profit after tax is VND15,000 billion ($576.8 million), an increase of nearly 25% compared to 2024.

On the Ho Chi Minh Stock Exchange, Hoa Phat Group's HPG shares closed Thursday at VND26,000 ($1) apiece.