Vietnam steel export in 2021 set to grow further

Vietnam’s flat steel export to EU will likely grow strongly this year while the global export is predicted to drop due to the Covid-19 impact, according to Viet Dragon Securities Company (VDSC).

Several flat steel producers, such as Hoa Sen Group (HSG) and Nam Kim Steel (NKG), have received enough orders for production in the entire first quarter of this year, mainly from the EU.

EU’s proportion of flat steel imports from Vietnam rose sharply from 2-3% of the latter’s total in 2019 to 9% in the fourth quarter of 2020.

"The EU's import volume from its largest flat steel exporter, Turkey, has dropped by roughly 30% year-on-year from 3.4 million tons to 2.4 million tons, thus making room for Vietnam’s producers," stated the VDSC in its report.

In term of coated steel, the EU's demand is high while its temporary barriers in export have been removed.

Despite the Covid-19’s negative impacts and Vietnam’s steel products being subject to anti-dumping investigations in several markets, 2020 was a successful year for Vietnam's steel exports.

Data from the Vietnam Steel Association revealed the export volume of construction steel and coated steel increased by 7% and 14% year-on-year, respectively in 2020.

“The pandemic’s positive effects on Vietnam’s steel export activities outweighed the negative ones,” noted the report.

Due to the limited impact of Covid-19 on Vietnam’s steel production, while other countries were hit strongly, Vietnamese manufacturers have seized opportunities to gain more market share, especially in China, Thailand, and the EU.

To boost economic recovery after the pandemic outbreak, there is a higher demand for construction steel from infrastructure projects in several countries.

For instance, steel exports from Vietnam to China and Thailand increased strongly by 718% and 82% year-on-year in 2020, respectively.

Steel production at Hoa Phat Group. Photo: Tran Dung.

Temporary export difficulties in key markets, especially Indonesia, are decreasing as Covid-19 is gradually contained in countries around the world. Domestic exporters did not obtain permits to export to Indonesia as this country closed its borders control the pandemic.

As a result, many companies could not export to this country from the beginning of the year until July 2020. Hence, Vietnam’s steel export to Indonesia decreased by 37% year-on-year in volume terms.

Anti-dumping and anti-subsidy duties on Vietnam’s steel products

Malaysia has recently announced that it will officially impose tariffs on coated steel products from Vietnam with a margin of 3.1% -37.1% from January 24-May 23. Accordingly, HSG is subject to a relatively high tax rate of 16.55%. However, tariffs on this product will not affect this company significantly in 2021 as the share of this market in HSG's export structure has decreased to 4%-5% in 2020, stated the VDSC.

Meanwhile, other listed companies such as NKG and Hoa Phat Group (HPG) are also subject to tariff of 5% and 3%, respectively, which are lower than many Chinese and South Korean companies.

“This can help these companies maintain their competitiveness in Malaysia, which mainly imports coated steel from Vietnam, China, and South Korea,” added the report.

Vietnam’s flat steel products were also under new anti-dumping investigations in Australia, the Philippines, US, and Turkey in 2020.

“As these countries accounted for roughly 3.5% in Vietnam’s total export volume of steel, we think the effect will not be significant for Vietnam’s producers,” stated the report.