Vietnam’s steel industry faces trade defence measures
As Vietnam seeks to increase its steel exports amid global overcapacity, the steelmaking industry is expected to face tremendous pressure from trade defence measures deployed by the importing countries.
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Over the past decade, Vietnam’s steel production capacity has grown substantially from 1.5 million tonnes per year to 21 million in 2016. Vietnam’s current capacity now tops Southeast Asia at more than 30 million tonnes. In 2017, the country’s steel exports were 5.5 million tonnes (up 28.5%), bringing in US$3.6 billion (up 45.4%).
The industry is forecast to grow between 20% and 22% this year. While exports are facing significant pressure, the domestic market is witnessing fierce competition as foreign steel is rolling in. Certain types of steel that Vietnam can now produce such, as colour-coated steel, are still imported in high volume.
Steel is one of the fundamental economic sectors, the basic input of most key industrial sectors. Therefore it always tops the list of goods subject to trade defence. Most major markets, such as the US and the EU, use this measure to protect their domestic production, causing difficulties for Vietnamese exporters.
Recently, the US imposed a 25% tariff on imported steel from many countries, including Vietnam, citing security reasons. Soon after that the European Commission also launched a probe into imported steel over concerns that steel intended for the US market would be re-directed to Europe.
Several other countries such as Canada, India and Thailand have also hinted at using safeguard action. It is clear that many countries are taking the initiative in dealing with steel overcapacity.
As Vietnam is becoming more and more deeply integrated into the global economy, the protection of local producers in other countries requires the Vietnamese authorities and steelmakers to work together to improve the sector’s competitiveness and hold on to both the domestic and international markets.
Steel producers should be more cautious of increasing their capacity, as well as enhancing the quality of their products and broadening their international trade knowledge, in order to minimise the risks.
They should also re-organise their export structure to avoid concentrating on only a few markets, which causes a spike in exports and prompts the importing countries to launch safeguard probes.
For their part, the relevant authorities should provide up-to-date information on the policies of importing countries, especially the rules of origin, to promptly alert domestic producers.
