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Domestic steel prices “dances” according to the world, what does Vietnam do to be autonomous?


Domestic steel prices fluctuate according to world prices, because most of the raw materials are imported.Need to be autonomous in the steel industry, avoid fluctuations.

Increasing the value-added chain in the production process

Raw materials make up 90% of the steel production price, so when the raw materials increase, the domestic steel price is pushed up. Steel prices increased in large part due to the level of world prices. So, how to take control of the steel industry, avoiding world volatility?

According to Mr. Nghiem Xuan Da, Chairman of the Vietnam Steel Association (VSA), China is accounting for up to 60% of global crude steel production. But the evolution of this market has pushed world steel prices up recently, Vietnam is no exception when importing from this market.

domestic steel prices "dance" according to the world, what does vietnam do to be autonomous?
Currently, steel prices are still anchored at a peak of about 18.6-20.6 million VND/ton (breaking the peak of 18 million VND in 2021), nearly doubling compared to the stable time (10-13 million VND/ton) …

While, although the production capacity of steel products of Vietnam’s steel industry has fully met the domestic market, raw materials such as iron ore, steel waste, fuel and regularly consumed materials such as coal grease, coke, electrodes, rolling rolls, refractory materials… for steel production must mostly be imported.

The Vietnamese steel market is therefore heavily dominated by the global market. Therefore, there is only one way to use the rules of supply and demand of the domestic market to lower the price of this item to be sustainable.

HOW TO DO IT ? According to VSA representatives, the Association has recommended that steel producers research investments to increase the value-added chain throughout the steel production process.

In particular, it is necessary to search for stable raw materials in the international market with reasonable prices. Calculate long-term contracts to proactively supply and stabilize prices.

At the same time, innovation in production aims to demonstrate competitiveness well through product restructuring to make appropriate adjustments, ensuring long-term development.

In fact, Dang Viet Thanh, Head of Technology, Hai Duong Hoa Phat Steel Department, said that Hoa Phat can now take control of new steel products to replace imports such as high quality rolled steel products, drawn steel…

“This is because of the advanced and optimal technology of refining and degassing of Hoa Phat to ensure the high requirements of these steel grades,” Thanh said.

According to Mr. Thanh, HRC hot rolled steel is one of the steel items that Vietnam has not been able to produce before, which is now a pride for the maturity of Hoa Phat. The product is used as a raw material to produce steel pipes, roofing strip and other specific products such as container shells…

In 2021, Hoa Phat delivered 2.6 million tons of HRC to the market. The Vietnamese market currently consumes about 14 million tons of HRC/year. The output of Hoa Phat and Formosa Ha Tinh has only met about 50% of the demand, the rest has to be imported.

Therefore, the Group is also promoting the implementation of Hoa Phat Dung Quat 2 Iron and Steel Production Complex, focusing on hot-rolled steel production with a capacity of 5.6 million tons/year.

Need mechanisms to promote mineral exploration and exploitation

As for the autonomy of input material supply, VSA representative said that, although Vietnam has iron ore mines such as Thach Khe (Ha Tinh), Quy Xa (Lao Cai) is considered the largest in Southeast Asia, the exploitation is not favorable.

Recently, after many years of “mirroring”, Ha Tinh province has proposed to terminate the project of recruiting Thach Khe iron ore, closing the mine at least until 2070 to adjust the planning for tourism development. Meanwhile, the Government has also approved the proposal of Lao Cai province to allow the exploitation of 1 million tons of iron ore at Quy Sa iron mine in order to restore production of the Vietnam-China Iron and Steel Plant, but continue to restructure and evaluate the efficiency…

Expressing the view on the autonomy of the steel industry, representatives of the Vietnam Mechanical Enterprise Association see that we are now somewhat self-sufficient in the supply of finished steel. It is evidenced that in Southeast Asia, Vietnam is at number 1, accounting for about 30% of the region’s total crude steel production.

In the last 10 years, Vietnam’s steel industry has flourished, until 2020, Vietnam’s steel industry has risen to the 14th place in the world. In 2020, Vietnam’s crude steel production reached a very high level of 19.5 million tons per year, from 2.4 million tons in 2000. This is a fairly high development in the international steel market.

However, in order to be self-reliant on inputs for production, it is essential for the state to have policies on mineral exploitation.

“It is necessary to complete the legal system, mechanisms and policies on geology, minerals and mining industry; Improve the effectiveness and efficiency of state management of geological resources, minerals and mining industry”, according to the representative of Vietnam Mechanical Enterprise Association.

Source: Bao Giao thong

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