Vietnam Steel Market Outlook to 2028

Vietnam Steel Market Overview 

• The Vietnam Steel Market production was volumed at 13 million tons. This growth is primarily driven by increased infrastructure development, rising demand in the construction sector, and expansion in manufacturing activities. The Vietnamese government's continuous investment in infrastructure projects, coupled with foreign direct investment (FDI) in manufacturing, has significantly contributed to this upward trend. 

• The key players in this market, include Hoa Phat Group, Pomina Steel Corporation, Vietnam Steel Corporation (VNSTEEL), and Nam Kim Steel. These players are involved in both the production and distribution of various steel products, catering to domestic and international markets. 

• A significant development in the Vietnam steel market was the inauguration of Hoa Phat Group's Dung Quat Iron and Steel Complex in early 2023. This complex is one of the largest steel production facilities in Southeast Asia, with an annual production capacity of 6 million tons.  

• Ho Chi Minh City is the dominant region in the Vietnam steel market, due to the city's rapid industrialization, extensive infrastructure projects, and its role as a major commercial hub. The presence of large industrial parks and manufacturing facilities further consolidates its leading position. 

Vietnam Steel Market Segmentation 

The market can be segmented into various factors like product type, end-user, and region. 

By Product Type: The market is segmented by product type into long steel, flat steel, and tubular steel. In 2023, long steel held the dominant market by its extensive use in construction and infrastructure projects. The versatility and strength of long steel make it a preferred choice for building bridges, roads, and high-rise buildings. 

By End-User Industry: The market is segmented by end-user industry into construction, automotive, and manufacturing. In 2023, the construction industry was the largest consumer, due to the rapid urbanization and significant government spending on infrastructure projects have spurred the demand for steel in the construction sector. 

By Region: The market is segmented by region into north, east, west and south. In 2023, the Northern region’s dominance is due to its concentration of industrial zones, access to raw materials, and well-established infrastructure. The presence of major steel production facilities, along with strategic proximity to key export markets such as China and ASEAN countries.  

Vietnam Steel Market Competitive Landscape 

• VNSTEEL: In 2022-23, VNSTEEL faced significant challenges, with a nearly 31% drop in net revenue, resulting in an after-tax loss of 216 billion VND in the first half of 2023. This decline was attributed to reduced domestic demand and a struggling real estate market, impacting the overall steel industry in Vietnam. 

• Pomina Steel Corporation: In the first nine months of 2023, Pomina Steel Corporation reported a net loss of 648 billion dong. This significant loss is attributed to reduced sales volume, lower selling prices, and increased production costs. Pomina's revenue for this period decreased by 74% to 2,948 billion dong compared to the same period last year, highlighting ongoing financial challenges in a competitive market. 

Vietnam Steel Market Analysis 

Market Growth Drivers 

• Manufacturing Expansion: The manufacturing sector is set to expand with an additional 100,000 new manufacturing facilities expected to be established in 2024, leading to increased steel consumption for machinery, equipment, and construction. 

• Automotive Industry Growth: With the production of 500,000 vehicles anticipated in 2024, the automotive industry will significantly drive the demand for high-quality steel for vehicle manufacturing and assembly processes. 

• Infrastructure Investments: The Vietnamese government plans to invest 400 trillion dong in infrastructure projects in 2024, including highways, urban railways, and bridges. These projects will significantly boost steel demand, providing substantial growth opportunities for the steel industry. 

Market Challenges 

• Trade Barriers: The imposition of trade tariffs and anti-dumping duties on Vietnamese steel exports by various countries could impact the competitiveness and profitability of local steel producers, reducing export volumes and revenues. 

• Raw Material Price Volatility: The price of iron ore, a key raw material for steel production, is expected to remain volatile, with fluctuations between 100-150 USD per ton in 2024. This volatility poses challenges for cost management and pricing strategies for steel manufacturers. 

Government Initiatives 

• National Steel Development Plan: In 2022, the Vietnamese government will implement a National Steel Development Plan, allocating VND 2.87 million to modernize steel production facilities, enhance research and development, and improve production capacity. 

• Green Transformation Commitment: The Vietnamese government, alongside the Vietnam Steel Association, has emphasized a commitment to transitioning the steel industry towards more sustainable practices. This initiative is part of the broader strategy to reduce carbon emissions and enhance environmental sustainability in line with global trends. 

Vietnam Steel Market Future Outlook 

The future outlook includes increased steel demand, technological advancements in production, adoption of sustainable practices, and growth in steel exports. 

Future Market Trends 

• Export Growth: Vietnam's steel exports are expected to growing more as it was 11.13 million tons in 2023. This growth is driven by competitive pricing, improved production capacities, and expanding market access in ASEAN and European countries. 

• Adoption of Advanced Manufacturing Technologies: By 2028, 60% of Vietnam’s steel manufacturing facilities are expected to adopt Industry 4.0 technologies, including automation and AI, to enhance production efficiency and reduce costs. This technological shift is projected to result in a increase in production efficiency across the industry.