hand, steel demand in Thailand, the top steel consuming country in ASEAN, registered negative

growth rate of -1.6%. Meanwhile, Singapores steel demand showed the sharpest decline in the
region at -10.4%.
Chart 2 illustrates the production, import, export and apparent steel consumption of total steel
products in ASEAN. In 2014, domestic production increased by 8% y/y to 27.5mn tonnes as a
result of slower imported steel raw materials. Imports continued to increase but at a slower rate
of 3.4% to 46.4mn tonnes, as compared to the surge of 11.4% in 2013. Exports jumped by 10%
to 8mn tonnes, compared to marginal increase of 1.2% in 2013. According to SEAISI, ASEAN
steel consumption is expected to grow by 4-5% per annum till 2017 and is likely to reach 70mn
tonnes in 2016.
Chart 2: ASEAN production, import, export and consumption (2008-2014)
70

Million metric tons

60
50
40

10

41.7

30.5

40.3

44.9

46.4

25.5

27.5

34.1

30.4

23.7

30
20

52.4

49.1

46.2

65.9

63.1

58.6

25.0

26.2

24.5
9.3

6.5

26.1
7.5

25.5
7.8

7.2

8.0

7.3

0
2008

2009

2010

Production (hot-rolled steel products)

2011
Import

2012
Export

2013

2014

Apparent steel consumption

Source: SEAISI

1.3

Country overview

1.3.1 Market situation

Vietnams steel industry saw a revival in 2014 with high demand, falling inventories, low inflation
and recovery of the domestic economy. GDP reached USD 186.4bn in 2014, an increase of 6%
y/y. GDP growth rate has increased since the last four years, while inflation was controlled at a
low level, which contributed to an active real estate market since late 2013.
The government raised public investment while banks started disbursing loans for construction
projects. In 2012-13, the countrys steel industry was under major pressure, with record-high
monthly steel inventories, low demand and high interest rates, according to the Vietnam Steel
Association (VSA). Many steel plants could only run at about half of their production capacity
due to weak demand. The depreciation of the VND against the USD had also added pressure
on the industrys profit margins, as most loans in the steel industry are in foreign currencies.
Lower consumption and rigid competition from low-priced Chinese imports forced several steel
companies to cut their prices.
According to the VSA, boosting exports was the solution. In 2014, export of steel products
showed a significant increase of 23% y/y to reach 3.12mn tonnes. The increase in exports was
mainly due to the positive effect of export promotion schemes, which encouraged local
companies to find foreign partners.

Steel

Vietnam

By the end of 2013, the frozen real estate market showed signs of recovery as this sector is the
main steel consumer in Vietnam. By the end of 2014, apparent steel consumption increased
sharply by 22.8% and reached 14.44mn tonnes, registering the highest growth rate in the
ASEAN region. The main reason for the increase was the large volume of boron added bars
and coils, flat steel products which were considered as alloy steel. Nonetheless, there was
excess capacity in finished and semi-finished steel products compared to domestic demand. In
2014, raw material prices for steel making in domestic market continued to witness downward
trend, same as the global market. Controlling inflation and stabilizing the economy remained as
the governments top priority throughout 2014-15.
2015 will be a promising year for Vietnams steel industry with rising consumption, higher
expected GDP growth rate of 6% and increases in both export turnover and total investment.
Industries that are the main steel consumers such as shipbuilding, automobile manufacturing
and mechanical engineering will see healthy growth. As such, overall steel consumption growth
rate in 2015 will increase by around 1.5-2mn tonnes compared to 2014, with consumption of
long product growing 10-13%; and steel pipe and galvanised steel growing by 15-18%, based
on the associations estimates. However, major downside risks for Vietnams steel industry will
remain the huge importation from China and the fluctuating global materials for steel making.
Table 6: Vietnam key economic indicators (20102014)
2010

2011

2012

2013

2014

GDP growth (%)

6.4

6.2

5.2

5.4

6.0

GDP per capita growth (%)

5.3

5.1

4.1

4.3

4.9

Agriculture growth (%)

3.3

4.0

2.7

2.6

3.5

Industry growth (%)

7.2

6.7

5.7

5.4

7.1

Services growth (%)

7.2

6.8

5.9

6.6

6.0

Unemployment rate (%)

Central government expenditure (%
of GDP)
Inflation (%)
Exchange rate to the USD (annual
average)
Population (mn)

2.6

2.0

1.8

7.5

n/a

27.2

25.4

28.2

26

26

9.2

18.7

9.1

6.6

4.1

18,621

20,490

20,828

20,935

21,149

86.9

87.8

88.7

89.7

92.6

Current account balance (% of GDP)

-3.7

0.2

5.9

4.2

4.4

Export growth (%)

26.5

34.5

18.2

15.3

13.7

Import growth (%)

19.6

25.8

8.7

16.5

12.1

Sources: Asian Development Bank; World Bank

1.3.2 Consumption
Similar to other ASEAN member countries, Vietnam is a big net importer of steel products since
domestic supply has not sufficiently met demand. The countrys apparent steel consumption
surged 22.7% y/y to 14.44mn tonnes in 2014, where long and flat products rose by 17.8% to
6.97mn tonnes and 30.8% to 7.81mn tonnes, respectively. The main reason for the increase in
steel consumption was the large volume of boron added bars and coils, flat steel products which
were considered as alloy steel. Imported boron added hot-rolled coils (HRC), cold-rolled coils
(CRC), construction steel products were declared to be alloy steel in order to enjoy zero import

Steel

Vietnam

tax. The VSA targets domestic steel consumption to increase by 1.5-2mn tonnes in 2015, with
long products growing by 10-13%, and steel pipe and galvanised steel to grow higher at 1518%, thanks to the revitalised realty sector. With significant demand growth, Vietnam could
overtake Thailand as the regions largest steel consumer in 2015, according to SEAISI.
Table 7: Vietnam apparent steel consumption of total steel products (metric tonnes) (20102014)
Production (A)
(Hot-rolled steel products)
Import (B)
Export (C)
Apparent steel consumption
(A) + (B) (C)

2010

2011

2012

2013

2014

5,658,500

5,470,296

5,049,000

5,123,000

5,657,000

6,727,600
1,281,200

5,981,025
1,753,802

7,568,000
1,661,000

8,791,000
2,145,000

11,055,000
2,271,000

10,572,043

9,697,519

10,956,000

11,769,000

14,441,000

Source: SEAISI

Table 8: Vietnam apparent steel consumption by finished steel products (tonnes) (20102014)
2010

2011

2012

2013

2014

Rails & accessories

20,000

34,000

Steel sheet piles

26,000

63,000

Sections

194,100

290,790

196,000

257,000

416,000

Bars

4,580,700

4,255,937

3,730,000

3,793,000

4,521,000

Wire rods

1,463,100

1,393,978

1,464,000

1,736,000

1,888,000

Plates
Hot-rolled sheets & strips

538,000

819,000

1,264,000

4,355,700

3,583,634

4,818,000

5,027,000

6,370,000

1,997,900

1,732,367

1,968,000

2,229,000

2,603,000

Cold-rolled electrical sheets

Galvanised sheets

913,000

1,212,000

1,437,000

Tinplates

34,000

25,000

91,000

1,356,300

1,427,548

765,000

858,000

1,472,000

746,900

695,800

675,654

933,000

956,000

Tires & wheels

Cold-rolled sheets & strips

Other metallic-coated sheets

Pipes & tubes
Source: SEAISI

Chart 3 shows that the construction sector is the major driver of steel consumption in Vietnam
with 60% share of total steel used. This is followed by the automotive, machinery and electrical
appliances sectors.
Chart 3: Vietnam steel consumption by industries
Electrical
appliances
7%
Machinery
12%

Others
7%

Construction
60%

Automotive
14%
Source: SEAISI

Steel

Vietnam

1.3.3 Production
There are two main product segments: long steel (bar, roll) and flat steel (plate, sheet). Each
segment makes up 50% of annual demand. In particular, long steel segment primarily serves
the construction sector and is dominated largely by local producers. Flat steel segment serves
mainly the automotive, electronics and shipbuilding sectors.
Due to better demand prospects, domestic production of finished steel products in 2014
increased strongly by 19.8% to reach 12.33mn tonnes. Production of crude steel products (steel
billet) was 5.85mn tonnes, up 6.8% y/y. Production of cold-rolled coil surged 31.5% to 2.62mn
tonnes. Production of metallic and colour coated products increased 20.8% y/y to 1.61mn
tonnes, while production of long products increased 10.4% y/y to 5.66mn tonnes. Production of
pipes and tubes also rose 26% y/y to 1.22mn tonnes. In 2015, overall steel production is
expected to rise by 1.5-2mn tonnes to reach 14mn tonnes in line with higher demand growth.
By the end of 2014, there was excess capacity in finished and semi-finished steel products
compared to demand in the domestic market. Capacity operating ratio of finished steel products
was only 60.62%, of which metallic and colour coated products was 70.3%; long products
60.31%; welded steel pipe (57.73%); and CRC with the lowest operating ratio (54.41%).
Chart 4: Vietnam steel production and consumption (2004-2014)
16

14.4

14
10.9

Mn tonnes

12
8
6
4
2
0

8.2
6.1

5.7

5.3

4.2
3.3

3.7
2.8

0.9

0.7
2004

2005

9.2

9.2

5.7
4.3

5.5
4.9

6.9
5.6
4.0

4.7
3.5
1.9
2006

2.0
2007

5.8

4.7

3.9
2.3
2008

9.7

9.3

10

11.8

11.0

10.6

10.3

9.2

5.5
5.1

5.3
5.0

5.8
5.7

2.7
2009

2010

2011

2012

2013

Crude steel production

Hot-rolled steel production

Finished products production

Apparent steel consumption

2014

Source: SEAISI

Table 9: Vietnam production of crude steel and hot-rolled steel products (metric tonnes) (2010
2014)
2010

2011

2012

2013

2014

Crude steel products (billet)

4,314,000

4,900,000

5,298,000

5,474,000

5,847,000

Hot-rolled steel products

5,685,500

5,470,296

5,049,000

5,123,000

5,567,000

sections
bars
wire rods

42,700

34,970

30,000

22,000

40,000

4,665,500

4,427,968

3,975,000

4,100,000

4,582,000

950,300

1,007,358

1,044,000

1,001,000

1,035,000

Source: SEAISI

Steel

Vietnam

Table 10: Vietnam total production of finished steel products (metric tonnes) (20102014)

Rails & accessories

Steel sheet piles
Sections
Bars
Wire rods

2010

2011

2012

2013

2014

42,700

34,970

30,000

22,000

40,000

4,665,500

4,427,968

3,975,000

4,100,000

4,582,000

950,300

1,007,358

1,044,000

1,001,000

1,035,000

Plates

Hot-rolled sheets & strips

Tires & wheels

Cold-rolled sheets & strips
(carbon steel)
Cold-rolled electrical sheets

1,720,000

1,472,887

1,747,000

1,992,000

2,620,000

Galvanised sheets

n/a

n/a

633,000

876,000

1,169,000

59,000

Other metallic-coated sheets

1,196,000

1,478,489

1,009,000

1,329,000

1,605,000

Pipes & tubes (welded)

Total finished steel products

673,800
9,248,300

731,159
9,152,831

774,654
9,212,654

969,000
10,289,000

1,221,000
12,331,000

Tinplates

Source: SEAISI

1.4

Steel scrap

Vietnam imports a large amount of scrap as domestic source is limited for use in long steel
production. In 2014, the level of scrap imports increased moderately by 3.3% y/y to 3.3mn
tonnes due to the increase in supply. Major sources of scrap import were Japan, Australia and
the U.S. Domestic scrap demand increased slightly by 1.4% y/y to 5.7mn tonnes, while supply
stagnated at 2.4mn tonnes. Export was not significant, but the volume jumped significantly by
47% to 65,000 tonnes in 2014.
Table 11: Scrap demand and supply (metric tonnes) (2013 vs. 2014)

Supply
Domestic supply
Imports
Total.(A)
Consumption (for steelmaking).(B)
Exports
Stock changes(A)-(B)-(C)

2013

2014

% Growth

2,371,000
3,235,000
5,606,000
5,606,000
44,118
-44,118

2,363,000
3,342,967
5,705,967
5,706,000
65,000
-65,033

-0.3
3.3
1.8
1.8
47.3
n/a

Source: SEAISI

Steel

Vietnam

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