Article Description : This article titled ‘Market overview – Steel suppliers in Vietnam’ covers important facts about the raw material that a professional must know before the commencement of supplier sourcing in Vietnam.
Steel industry of Vietnam showcases a growing trajectory due to a stable economic scenario of the country. The equilibrium of the country’s economy is a major reason for the progress in the sector besides several internal and external challenges. This economic growth is largely driven by the manufacturing and processing sector, among which steel production plays an important part.
Amidst various fluctuation factors, the production of crude steel outraced other metals causing an offset in the economy of the steel sector. Due to high production and demand, the exports from Vietnam demonstrated a high velocity of growth whereas the external factors like US-China trade friction weakened the import fraction.
However, the overall fashion of the industry indicates growth in a consistent manner. It is because, Vietnam’s geographical location makes it more susceptible to make momentous trade deals that could render external support during internal imbalances. Apart from this, the country’s effort in building blast furnaces at different locations is set to drive the trend in a much more constructive path. The installation of several blast furnaces in the near future is set to boost the crude steel production in the upcoming years.
Another major reason of growth is the demand from the construction sector that utilizes Steel on a large scale. As a result of the boom and flourishing demand, the pace of Foreign Direct investment has elevated on a large scale with several proposals to establish new steel ventures in the country. However, several policies are adopted to control and maintain the scenario and to be prepared for any uncertainties in the industry.
The industry had been demonstrating a growing trend in the recent years. The excess rate of growth however has resulted in over-production. As a matter of fact, the country’s surplus availability of steel urged the reduction of import from other countries to maintain a steady supply flow. This invited the need for the Vietnamese government to seek the support of Foreign direct investments into the country.
Although minor fluctuations were witnessed in the recent months in the economy of the industry, he production of crude steel and rolled steel remained stable. Formosa Ha Tinh Steel Corporation and Dung Quat steel factory are the 2 major driving forces that contributed to the stability and abundant growth of the sector. The intense production operation with development projects carried out in these industries prove to be the most crucial resources in the growth of the overall steel industry of Vietnam.
1. High input costs: The escalation in the price of essential resources like electricity and ore has affected the industry largely.
2. Internal pressure: A few establishments in the sector are facing trouble with the finances in the form of high debts pressure. This hinders the normal flow of cash across the industry.
3. Inflation and rate of interest: There are several businesses that depend on financial support. In the recent years, there is a slight inflation observed in the overall economy of the country. This has substantially caused a rise in the interest rate of industrial debts. Several suppliers suffer the effect of this inflation and hike in the interest rates.
4. Geo-political changes: Geo-political changes affect the interrelationship of businesses between countries or businesses within a country itself. This leads to amendments in the policies, standards and rules interfering the process flow in the sector.
5. US-China Trade Friction: The ongoing trade friction between the United states and China has largely affected the trade in many countries which has partly affected Vietnam too. China and the US are two major metalworking giants that make big trades with Vietnam. Since the economic activity of both these giants are recently fluctuating on a large scale, there is an unpredictable effect in the Vietnamese market.
6. Reservoir damage in the Iron ore mine in Brazil:
The Brazilian iron ore mine located at Brumadinho, Minas Gerais State is an important supplier of Steel to the Vietnamese market. Due to a damage in its reservoir, the supply of steel from this mine has been immensely affected. As one of the importers, Vietnam suffers a lack of steel import from this particular resource causing a slight disturbance to the economy of the sector.
The major influencer of the price changes in the industry is the policy of protectionism. Protectionism is the practice carried out by countries to taxing imports to international investors. This tax is set to expire in the year 2021 but is expected to be implemented causing a difficulty to Steel suppliers in Vietnam.
The trade friction between China and the US is another major reason for the fluctuation in the prices of Steel. The external pressure has affected the trade in Vietnam as well as the prices of steel products.
Due to an inflation in the economy, the charge of electricity has increased slightly. This will however cause a major impact on the price of manufacturing/ production of steel.
Sectors: Construction, Home appliances, Packaging, Energy and automobiles
The existing demand for Steel suppliers in Vietnam lies in the construction ventures, domestic market and the real estate market.
The import of low-quality steel focusing on the low prices has largely affected the domestic market of China. This has implicated a pressure in the resultant product quality from the manufacturing sectors of Vietnam.
PREDICTIVE INSIGHTS AND OUTLOOK:
The recent surveys predict that Vietnam’s growth capacity and its intensity as a steel producer will make the country emerge as a net exporter of Steel in the coming years. In addition to this, it is foreseen that the increase in the investments from foreign venture capitalists will enhance the economic stability of the sector extensively.
Furthermore, the growth of the construction sector helps the country’s demand for steel always on an apex. Domestically, the need for improvement in the infrastructure adds in as another important factor that is expected to expand the steel sector of Vietnam further, enhancing sourcing of Steel suppliers in Vietnam.
Likewise, the new projects and policies in the road map of the Government is expected to keep the position as a dominant sector.
Potential Steel Suppliers in Vietnam:
Vietnamese suppliers in our Global Metalworking network