Who are major players in the Vietnam galvanized
steel market?
According to VSA (Vietnam Steel Association), the apparent consumption in
2015 was 3.3 million tons nationwide, including products produced in the
country is 2.1 million tons and the rest is the import products.
Domestic market share of the leading companies
and also the members of the Vietnam Steel Association:
These companies have different competitive advantages,
some of them is pursuing the strategy to scale up the production and occupy a
large part of the domestic market, others are pursuing a strategy of enhancing
product quality beside the development of production scale, such as TDA,
Sunsteel and SSSC. For the steel industry in general as well as the galvanized
steel industry, large-scale production is a leading advantage, so we can see
clearly the investment projects being developed continually recently.
80% of capacity is being exploited!
The production capacity of Vietnam metallic
coated steel industry currently approximately 3.6 million tons a year in the
hands of about 10 large companies and 10 small companies, meanwhile the
production of galvanized steel in 2015 reached 3.1 million tons, which
exploited 81% the capacity.
According to my survey, the production capacity
increased in 2016 and 2017 about 2.4 million tons, raising the capacity to 6
million tons nationwide, equivalent to the capacity increase is 60%! Galvanized
steel industry is the sector with the highest consumption in the segments of
the steel industry recently, however, the average annual growth (CAGR) in
recent years was only 22%. Thus, this growth of production capacity is
relatively high compared to the actual demand.
New
entrants?
There is quite a lot of investment projects
implemented in recent time, making the galvanized steel market became very hot
in Vietnam. Typically, the project to expand the phase 2 of TDA Thu Dau Mot,
increasing the capacity of 600 thousand tons per year; No.3 Nam Kim project
raises capacity further 650 thousand tons per year; Hoa Sen Nghe An project raises
the capacity up to 430 thousand tons per year, and a largest player of long
steel sector, Hoa Phat, recently announced a project for producing galvanized
steel sheet with capacity of 400 thousand tons a year as a potential new entry.
Hoa Phat currently covers a whole production chain
of steel, from iron ore to iron making and steel making, but, the output is
only long product. It is going to produce flat products, but, starting from the
downstream of steel value chain. This approach strategy is very popular in the
world, of course, there are some existing competitors, also are preparing to go
up to the upstream. If Hoa Phat wants to close the supply chain of steel
industry, it needs to invest new melt shop, slab casting, as well as hot strip
mills and tandem cold mills, it shall be a long way, of course, Hoa Phat will
not be alone in this journey.
Potential
demands?
FDI projects in Vietnam grows well, in 2015, total
investment capital is 15.23 billion US dollars, thus, the industrial
construction market developed very well from last year to this year, besides,
the real estate market recovers from last year and is growing quite hot this
year has given rise to huge demand for roofing products and welded steel pipes.
Pre-Engineered Buildings account for over 70% of
industrial workshops. Therefore, the growth prospects of the manufacturing
industry will entail a large demand for this type of home, accompanied with the
needs of the roofing and walls. According to Mr. Joseph Mathew, CEO of Kirby
Vietnam, in the period 2010-2013, the growth rate of Pre-Engineered Buildings
market reaches 15-17% per year, and the rate from 2014 until now must be
higher, according to my calculate, the total demand of the Pre-Engineered
Buildings of Vietnam around 600-800 thousand tons a year. The main players in
this market are Zamil Steel, PEB Steel, Kirby, Dai Dung, Atad, BMB.
In addition, the export of galvanizing steel sheet was
forecasted with a strong growth in 2016, exports of first two months was 98
thousand tons, an increase of 18% over the same period last year.
HCM city's metro is building which is scheduled for
completion in 2020 with a total investment of about $ 3 billion. In the period
from 2016-2020 Vietnam needs about 48 billion of USD to develop the transport
infrastructure system. The household electrical appliances industry and the
automobile industry are currently using imported materials. Those are very the
potential demands beside the existing demand for roofing and steel welded pipes
and it is the reason why the galvanizing industry of Vietnam always grows quite
hot.
The diversification of galvanized steel demand is
inevitable, as the chart above shows, the demand of the Chinese galvanized
steel in 2014, galvanized flat products accounted for only 57% of total demand.
