Vietnam's two largest steelmakers are readying to make multibillion-dollar capacity investments as the Southeast Asian nation tries to build up a domestic counterweight to its high dependence on Chinese steel.
Second-ranked Hoa Sen Group plans to spend $10 billion on production facilities in southern Vietnam's Ninh Thuan, taking advantage of the province's deep-water ports to import raw materials and export finished steel.
Construction will begin next year. Expected to go into operation in stages starting in 2019, the additional capacity is forecast to more than quadruple Hoa Sen's total to 16 million tons a year in 2031.
Hoa Sen has not revealed detailed plans for the new facilities, but they appear likely to feature a blast furnace -- something the country still lacks. A Taiwanese-led project by Formosa Plastics Group to start up Vietnam's first blast furnace has been set back by a toxic waste spill.
Hoa Phat Group, the Vietnamese steel industry leader, plans to build a $2.7 billion steelworks in the Dung Quat Economic Zone of Quang Ngai Province, on a site that a Taiwanese steelmaker had picked for a project that it proved unable to finance.
Hoa Phat aims to start the new steelworks as soon as 2020. Its 4 million tons of annual capacity will lift the group total 130%.
Hoa Phat is also working on a $170 million steel plate mill in Hung Yen Province, near here. That facility, with a capacity of 400,000 tons, is supposed to start production in 2018 and will supply material for construction projects in the Hanoi area, one of the country's biggest markets for architectural steel besides Ho Chi Minh City.
Vietnam's demand for steel is rising as the economy grows at a nearly 7% clip, one of the fastest paces in Southeast Asia. Imports satisfy nearly 60% of this demand. Steel imports jumped 33% last year to 15.7 million tons, 61% of which came from China.
Inflows of cheap steel, driven by Chinese overcapacity, have risen so fast that they have triggered Vietnamese "safeguard" tariffs in some cases. And given the tension with Beijing over competing territorial claims in the South China Sea, Vietnam's government appears eager to reduce dependence on Chinese steel.
SOurce:Asia Nikkei.com