The growth rate of Vietnam’s GDP in 2020 was about 2.9%. Considering the spread of COVID-19 in 2020, the annual GDP growth rate of 2.9% is already a good figure in the world. Vietnam’s economy has been increasing rapidly for many years, but wages of the manufacturing are still at a low level, which were less than 50% in China and far below that of the developed countries in 2020.
According to CRI analysis, as Vietnam’s economy develops and the living standards of residents rise, the demand for steel in the industries such as construction, automobiles and home appliances is also going up. The rapid development of steel demand has attracted many steel enterprises to build new steel capacity in Vietnam.
As the COVID-19 epidemic in Vietnam has been effectively controlled, the steel industry in Vietnam will not be greatly affected in 2020. Overall, Vietnam’s steel industry is still growing, and the homemade steel cannot meet the needs of the domestic market. According to CRI analysis, in 2020, the production volume of crude steel in Vietnam reached 30.67 million tons, representing a CAGR of 41.3% from 2013 to 2020.
Based on CRI’s analysis, seeing the huge potential of the steel market in Vietnam and even Southeast Asia, many enterprises have invested in Vietnam’s steel industry in recent years. The largest investment case is Formosa Ha Tinh Steel Corporation (FHS), which is a joint venture by Formosa Plastic Group, China Steel Corporation and Japan’s JFE Holdings, with a first-phase investment of more than USD 10 billion. Due to the rapid increase in production capacity of the steel industry in recent years, the supply of some types of steel in Vietnam has exceeded the demand, including concrete iron or steel for construction, cold-rolled steel coil products, etc. In order to reduce large quantities of imports such as hot-rolled steel coils and electromagnetic steel sheets, the Vietnam government is actively attracting foreign investors to establish positions in the country.
According to CRI analysis, there are more than 100 companies in Vietnam’s steel industry, of which the larger ones include Hoa Phat Steel, Hoa Sen Steel, Vietnam Steel Corporation, SMC Steel Company Limited, VSC-POSCO STEEL CORPORATION (VPS), Formosa Ha Tinh Steel Corporation (FHS) and so on.
At present, the Vietnamese government has not formulated nationwide policies for foreign investment in the steel industry. However, steel companies have been set up in many industrial parks in Vietnam, which are granted with preferential policies in taxation and other aspects.
In addition, as Vietnam’s manufacturing and construction industries develop rapidly, the demand for steel will continue to increase. It is estimated that, during 2021-2025, Vietnam’s roads, airports and other infrastructure, housing construction, automobile, home appliances and other industries will all maintain a high growth rate. On the whole, most of the domestic steel manufacturers are extremely low in production capacity (no more than 1 million tons a year), with the outdated equipment. Foreign-funded enterprises have seen great market prospects in investing in the steel industry of Vietnam, especially to establish one-stop businesses from the production of crude steel to the processing of various kinds of steel. For one thing, these steel enterprises can market in Vietnam. For another, they can export products to the Southeast Asian market with a total population of nearly 700 million, and even to the Asia-Pacific market with a population of more than 2 billion.
CRI considers that the Vietnam steel market will become one of the fastest growing markets in the world from 2021 to 2025. Meanwhile, the CAGR of production volume of crude steel is projected to exceed 15%. By 2024, Vietnam will become a net exporter of steel.
-The impact of COVID-19 on Vietnam’s Steel Industry
-Development Environment of Vietnam Steel Industry
-Supply and Demand of Vietnam Steel Industry, 2013-2020
-Analysis on Import and Export of Steel in Vietnam, 2013-2020
-Major Steel Manufacturers in Vietnam, 2019-2021
-Advantages and disadvantages of the development of Vietnam’s cement industry
-Prospect of Vietnam Steel Market, 2021-2025