Talking heads talk up more steel projects

Foreign investors are tipped to continue jumping into Vietnam’s steel manufacturing ventures to capture the country’s future increasing demand.

“Demand for steel products will burst in a near future, particularly when Vietnam is in the final stage to become an industrialised country in 2020,” said Deputy Minister of Industry and Trade Le Duong Quang.

“We have seen that Vietnam will be like other industrial countries, such as Japan, in their industrialisation period, to have steel industry grow 2.5 times higher than the gross domestic product growth rate,” Quang said.

Vietnam Steel Association (VSA) chairman Pham Chi Cuong said there would be big potential for local and foreign investors to expand investments in steel industry.

According to VSA figures, the average steel consumption in Vietnam stands at around more than 120 kilogrammes of steel per person, per year.

“The number will be 300-400 kilogrammes per person, per year for a country to become an industrialised economy,” Cuong said.

In early November, Jiangsu-based Chinese steel maker Jiangsu Sujia Group Co., Ltd inaugurated the first phase of its $9.8 million steel tube plant in southern Tay Ninh province.

Sujia Group received an investment licence last year and established Sujia Steel Pipe (Vietnam) Co., Ltd in Ho Chi Minh City in October, 2009. The Tay Ninh-based plant will be able to produce 100,000 tonnes of longitudinally welded tubes a year during the first phase.

The Chinese investor is expected to earn sales revenues of some $40 million annually upon completion of the whole project.

Earlier, the Petroleum Pipeline & Tank Construction JSC, a member of the state-run PetroVietnam Group, started the construction of a straight steel pipe plant, the first of its kind in Vietnam, in Soai Rap Oil & Gas Services Industrial Park in southern Tien Giang province.

The project which has a total investment of more than VND2.17 trillion ($108.5 million) will be capable of manufacturing 100,000 tonnes of steel pipes per annum. The plant is scheduled to become commissioning in the third quarter of 2011, mostly supplying the products for O Mon gas pipe construction project in southern Vietnam.

In November, Japanese firms JFE Steel Corporation, Maruichi Steel Tube Ltd. and Toyota Tsusho Corporation acquired Jeong An Vina Co., Ltd from a South Korean investor to help boost their steel pipe production in Vietnam.

“Although Vietnam has an oversupply of construction steel currently, there will possibly be a shortage of supply in the next 10 years, particularly in a wave of newly launched projects for ports, railways and other major infrastructure in the country,” Cuong said.

“It is not mentioned that the country still lacks of other kinds of high-quality steel products such as plate, shaped steel, pipe and high carbon steel,” he said.

The VSA has predicted that steel consumption in Vietnam will grow 10 per cent next year. The domestic consumption is anticipated to increase 9.8 per cent in 2010.

Steel makers in Vietnam will produce a total 8.7 million tonnes of steel this year, up 26 per cent from the previous year. – VIR

Tags: Vietnam steel industry, Vietnam steel market