“No country in the world accepts an amount of steel imports that exceeds its domestic production,” said Mr. Tran Dinh Long, Chairman of Hoa Phat Group, affirming at the General Meeting of Shareholders on April 11 when asked about the influx of imported hot-rolled steel into Vietnam.
To clarify this issue, reporters interviewed Mr. Hoang Ngoc Thuan, Foreign Trade University, about the issue that has caused much debate.
 Mr. Hoang Ngoc Thuan |
Steel enterprises have lost 1/3 of the market share in less than a year.
– According to the General Department of Customs, in 2023, the import volume of hot-rolled coil steel (HRC) was 143% higher than domestic production. In the first quarter of 2024, imported HRC steel reached 3 million tons, 1.5 times higher than domestic production, imports from China and India increased sharply by 75%. What is your comment on this phenomenon?
Mr. Hoang Ngoc Thuan:
It can be noted that in the past two years from 2021-2023, the volume of HRC steel imported into the domestic market has increased very rapidly. In 2021, Vietnam imported 7.5 million tons, by 2023 it had imported 9.6 million tons. Obviously, there has been a very rapid increase in the import volume of HRC steel. These 2 million tons are equivalent to an increase of over 25%, this is a relatively worrying signal.
If the total domestic demand does not increase, the significant increase in imports will lead to domestic manufacturers losing market share in the domestic market.
– Could you elaborate on the impact on domestic hot rolled steel producing businesses?
Firstly, in 2022-2023, domestic production also increased by nearly 1 million tons, but this increase in production was not accompanied by an increase in market share in the domestic market. Published steel production figures show that since 2022, domestic manufacturers have lost 1.5 million tons in the domestic market (the domestic consumption of domestic manufacturers in 2022 was 4.9 million tons, by 2023 only 3.4 million tons remained). Thus, the lost market share of domestic manufacturers has been filled by imports.
Secondly, let’s continue to ask the question if imports increase like this, will it have a serious impact on the domestic manufacturing industry? We should pay attention to this because if the domestic manufacturing industry is eradicated, in the future, HRC steel products will have to depend entirely on imports. In other words, we will not be able to control the output, cost…, and more importantly, the domestic HRC steel production industry will no longer be able to develop.
In addition, the use of domestic hot rolled steel will also ensure the business operations of Vietnamese businesses that produce downstream products for export abroad. That is, these businesses can avoid the risk of being subject to anti-tax avoidance measures by import markets such as the United States, EU, etc.
Thirdly, steel is an important commodity. For many countries (for example in Europe, the United States), the steel industry is a sensitive industry because it is an input product for many other industries, especially related to the defense industry. If the domestic manufacturing industry is eradicated and HRC steel products have to depend on imports, it will be dangerous (for any country).
– From your analysis, is it sufficient to apply trade defense measures to the hot rolled steel product?
To conclude whether there is sufficient basis to apply anti-dumping measures, we will need more information and especially the conclusion of the investigating agency. As you all know, in an anti-dumping investigation, 3 mandatory conditions are required to apply anti-dumping measures:
The first condition is that there must be dumping of imported goods, specifically HRC steel in the Vietnamese market. Whether dumping exists and at what percentage is a matter for the investigating agency.
The second condition is that there must be significant damage or threat of significant damage to the domestic industry, or prevent the formation of a domestic industry. We can provisionally conclude that the domestic HRC steel manufacturing industry has been established and the figures for 2022-2023 show that the domestic manufacturing industry has been significantly affected by the volume of imports into Vietnam.
Normally, to assess whether or not there is damage, it is necessary to assess a series of indicators such as sales value and volume, market share, output, profit, productivity, price…, to determine whether the domestic manufacturing industry has suffered damage and whether this damage is significant or not.
The fact that HRC steel has lost 1/3 of its market share in less than a year is one of the worrying signs.
The third condition is that there must be a causal relationship between the dumping of HRC steel and the damage to the domestic industry. We need more data and analysis from the relevant agencies, for example, whether there is an actual or potential decline in the above indicators, an increase in the volume of imported goods (suspected of being dumped), a decrease in the price of imported goods…
I think the significant increase in imported goods and the corresponding decrease in the domestic market share of domestic manufacturers in the same period is an objective sign to consider the causal relationship.
Returning to the question of whether or not there is a basis, I repeat that more information is needed from the Ministry of Industry and Trade, the Trade Defense Department, but with the current picture, it is possible to speculate that there is damage to the domestic manufacturing industry .
Challenges for the domestic HRC steel manufacturing industry
– Some argue that if trade defense measures are applied, there will be domestic businesses using imported HRC steel at a loss?
This is something that every item encounters if it initiates an investigation and imposes a tax. For example, when Vietnam was investigated by the United States for PVTM against tra fish, basa fish or shrimp, some importers of shrimp and tra fish and basa fish also expressed their opposition to the US Department of Commerce’s decision to initiate an investigation. About 10 years ago, when Vietnam initiated an investigation into a case of cold rolled stainless steel, some domestic businesses also opposed it.
 Hot rolled coil steel imports are larger than domestic production. Photo: HP |
One of the conditions for applying anti-dumping measures under the regulations of the European Union is to ensure that applying such measures is necessary in the interests of the EU Community. This is an additional condition that the EU has voluntarily adopted in addition to the 03 other mandatory conditions according to WTO regulations, including considering all relevant interest groups in the EU, including: (1) The interests of the relevant domestic industry; (2) The interests of the importers of the products under investigation; (3) The interests of the group of manufacturers in the EU who supply raw materials for the production of the products under investigation or who use the products under investigation; (4) The interests of consumers in the EU who use the products under investigation…
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