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Vietnam Steel Industry

Next Leap of Transformation

M.Tech CHU DUC KHAI

Vice president & Secretary General

VIETNAM STEEL ASSOCIATION

VIETNAM STEEL ASSOCIATION

Cooperation - Competition – Success together

1’

THE BEST WISHES TO THE ASEAN IRON & STEEL

SUSTAINABILITY FORUM

Ho Chi Minh City, Nov.26th. 2018

2

CONTENTS TO BE PRESENTED

1/ Vietnam’s Macroeconomics;

2/ Over view Ten years development of VN Steel Industry

3/ Development of VN’s Steel Industry among the World & ASEAN;

4/ Some lessons learned & idea for next steps of development;

5/ Conclusion.

1/ Vietnam’s Macroeconomics

Vietnam GDP Growth rate in last 10 years, 2007 - 2017

8.43

6.18

5.32

6.78

5.89

5.035.42

5.98

6.686.21

6.81

0

1

2

3

4

5

6

7

8

9

Social

Environmental

Economy

Average GDP growth rate in passed 10 year 6.25%/year,

supporting for steel consumption increased

22/ Over view Ten years development of VN Steel Industry

Years 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billet

production

2.02 2.25 2.70 4.32 4.90 5.30 5.24 5.85 5.65 7.81 11.47

Growth rate,

%

100% 111% 120% 160% 113% 108% 98.8% 111% 96.6% 138% 146%

Apparent

Steel

consumption

10.22 8.77 10.82 11.19 10.01 10.97 11.93 14.17 18.50 22.33 21.63

Growth rate,

%

100% 86% 123% 103% 89% 109% 108% 118% 130% 120% 97%

Steel Capita,

kg/head

131 159 200 240 231

Growth rate,

%

100% 121% 125% 120% 96%

4

Million Tons

Crude steel, Apparent steel consumption & Steel capita are increasing;

Average 10 years Grow rate: Billet: 118.4%; ASC: 107.5%; Steel capita: 112.4%.

www.vsa.com.vn

5

22/ Over view Ten years development of VN Steel Industry (cont…)

10.228.77

10.8211.1910.01

10.9711.93

14.17

18.5

22.3321.63

0%

20%

40%

60%

80%

100%

120%

140%

0

5

10

15

20

25

Gro

wth

ra

te, %

Mil

lio

n T

on

s

Apparent Steel Consumption

Apparent Steel consumption Growth rate, %

131159

200240 231

0

0.5

1

1.5

0

100

200

300

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Gro

wth

ra

te, %

kg/h

ea

d

Steel Capita, kg/head

Steel Capita, kg/head Growth rate, %

2.02 2.252.7

4.324.9

5.3 5.245.85 5.65

7.81

11.47

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

0

2

4

6

8

10

12

14

20072008200920102011201220132014201520162017

Gro

wth

rate

, %

Millio

n T

on

s

Billet production Growth rate, %

Billet production

www.vsa.com.vn

3/ Development of VN’s Steel Industry among the World & ASEAN (cont…)

Year 2015, Vietnam in ranked No 24

Source: WSA

2007

2017


Year 2017,

Vietnam

exported

4,7 Mil.

tons

& Imported

16 Mil.

Tons of

steel

products


Net IM. & EX. 2017

Tổng hợp SX-NK – XK & Tiêu thụ SP thép 2017Unit: ‘1000 MT

Note: To advoid from duplicate accumulating, the Vietnam ASC in 2017 = Production of Hot Rolled Steel

Products + Import - Export = 21.637.000 MT , down 3% y-o-y, including:

Long products= row (3.1+ 3.2+ 3.3) = 10,492,000 MT, down 0.4% y-o-y;

Flat Products= Production of HRC + Import - Export= 11,410,000 MT, decreased 5% compare to

2016.

(*) = (5) - (7)

2/ OVERVIEW OF VIETNAM STEEL INDUSTRY IN 2017

(Continue...)

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www.vsa.com.vn

No. Products Production Import Export Consumption

2016 2017 y-o-y 2016 2017 y-o-y 2016 2017 y-o-y 2016 2017 y-o-y

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

1 Scrap 2.502 4.621 185% 3.990 4.402 110% 79 201 254% 6.413 8.822 138%

2 Crude Steel 7.811 11.473 147% 1.220 286 23% 27 411 1522% 9.004 11.348 126%

3 Long product 8.657 9.924 115% 2.765 1.773 64% 887 1.205 136% 10.535 10.492 100%

3,1 Bars 7.086 7.277 103% 265 268 101% 270 374 139% 7.081 7.171 101%

3,2 Coils 1.302 2.096 161% 1.679 898 53% 306 470 154% 2.675 2.524 94%

3,3 Sections 269 551 205% 821 607 74% 311 361 116% 779 797 102%

4 Flat product 7.109 9.870 139% 14.363 12.868 90% 2.381 2.836 119% 11.982 11.410 95%

4,1 HRC 1.378 100% 11.570 10.207 88% 119 340 286% 11.451 11.245 98%

4,2 CRC 3.671 3.825 104% 891 1.150 129% 822 719 87% 69 431 (*) 625%

4,3 GI & Coulor 3.438 4.667 136% 1.902 1.511 79% 1.440 1.777 123% 462 -266 (*) -58%

5 Other steel 2.061 2.307 112% 323 381 118% 512 646 126% -189 -265 (*) 140%

5,1 Welded pipe 2.061 2.307 112% 201 122 61% 498 637 128% 1642 -515 (*) -31%

5,2 Seamless pipe - - 0% 122 201 165% 13 8 62% 145 193 (*) 133%

5,3

Other steel (Rails,

Steel Sheet Pile..) - - 0% 86 58 67% 1 1 100% 85 57 (*) 67%Total of Finished

Steel Products17.827 22.101 124% 17.451 15.022 86% 3.780 4.687 124% 22.328 21.637 97%


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+ With 10 countries;

+ Area: 4.46 mill. Km2

+ Population: > 640 Mill. People

with > 50% < 30 year old;

+ ASEAN’s GDP 2017 ~ 3,000

billion of US$;

+ Conterminous with the sea,

gateway inbetween the two

Oceans.

About ASEAN

11

Comparing ASEAN GDP with Other Economies 2016

Unit: billion of US dollars


India Japan China USA

About ASEAN

The GDP growth of economy will affect to countries' ability to consume steel

Source : IMF World Economic Outlook updated October 2016

+ According to the IMF, China's GDP growth rate for the period 2015-2022 will decrease but India

will increase;

+ ASEAN countries will maintain a stable growth rate of 4 to 6% in the period 2015-2022;

2017, GDP Vietnam reached 6,81%; CPI < 4%


13


14


Grow rate of Vietnam Steel consumption: 2015 2016 2017 2018F 2019F

26.4% 22.3% - 3% 3% 5%

4/ Some lessons learned & idea for next steps of development.

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The share of steel used in construction occupies a majority in ASEAN-6

The ratio of long steel used in construction with flat steel of ASEAN countries

Construction steel in ASEAN-6 countries is mainly included in large-scale projects for

economic development of the Governments

Steel used in construction,

mostly long steel. In Thailand,

Indonesia and Vietnam, the use

of flat steel is higher

Source: SEAISI

4/ Some lessons learned & idea for next steps of development (cont…)

16

Apparent Steel Use per Capita in 2016, by ASEAN 6, kg/head

Source: SEAISI & VSA

4/ Some lessons learned & idea for next steps of

development (cont…)

Opportunities:+ High population & young labors;+ Vietnam in Industrialization & Modernization, it is needed To develop materials industry included steel. Apparent steel consumption per Capita of VN now a day 231 kg/head, far below of average ASC in industrial countries(400-500 kg/head);

+ The issue of environmental protection requires more and

more strict. It is a chance to remove backquard technologies;+ Infrastructure projects and construction industry aredevelopment day by day;

Challenges: + Countries use more and more tariff barriers/Trade measures to restrict imports

to protect the domestic production such as the cases AD; SG; CVD...

+ Deep and wide integration brings many benefits but will also be affected by the impact of the world economy such as input materials price (HRC, Coke, Iron ore, Electrodes graphite, scrap, refractory materials…)

+ Technology equipment of some old investment enterprises is not advanced, limiting the competitiveness of domestic products;

17www.vsa.com.vn

WTO

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4/ Some lessons learned & idea for next steps of development (cont…)

+ Among 10 ASEAN countries, only

the Lao People's Democratic

Republic is not adjacent to the sea;

+ Adjacent to the sea, it look like

having a big house on the street, so in

the future, Shipbuilding will strong

develop in VN & other ASEAN countries. It

mean that Flat steel product will have high

demand;

+ In the process of industrialization & modernization

of the country, Vietnam as well as ASEAN countries

want to develop mechanical engineering Industry/

supporting Industry but facing with problem of

materials supply (alloying steel);

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4/ Some lessons learned & idea for next steps of

development (cont…)

+ 20 years back, we hired a EU’s Consultancy

made “Feasibility Study of a plant for

production of Special Steel” But it does not

come true because of the variety of

requirements and low market demand. The

plant will not have economic efficiency, slow

recovery time.

+ Basing on GDP growth rate of VN economic 5-7%/year

(forecast) for the next period 2018 - 2025, development of

VN’s steel industry will be concentrated on structural change:

prioritize for quality instead of quantity steel products. Production more flat & high quality product matching requirement of Ship building & Mechanical engineering;

Step by step renovate and replace backward technologies with new energy-saving technologies and reduce greenhouse gas emissions;

Developing large-scale, modern steel plants to replace small-scale, scattered plants;

Develop recycling, reuse for waste from steel mills such as slag, dust for saving resources;

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5/ Conclussions

An open question: AEC all ready established by

31/12/2015, can ASEAN 6 build up a Special steel

plant, which can produce alloying steel supply

for the demand of Mechanical engineering

Industry belong to ASSEAN 6 ??? Because

market in each country not big enough to bring

economic efficiency for the plant operation./.

The best wishes to all of you

and your family members.

Cooperation – Competition – Success Together

CONTACT ADDRESS:

M.Tech. Chu Duc Khai

E-mail: [email protected]

Thanks for paying attention !

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