Who will receive the biggest benefits from the steel production policy?
The ministry has decided to impose an official tariff of 23.3 percent on ingot steel and 15.4 percent on steel rods as an official safeguard measure against cheap imports to protect domestic production following a warning that domestic products pose a big threat.
The decision will take effect on August 2, 2016.
According to MOIT, no enterprise hold 30 percent or more market share, which is considered a dominant position.
Hoa Phat Group, VnSteel, Tisco and Viet Y Steel will benefit the most from the Ministry of Industry and Trade’s (MOIT) decision on July 18 to protect domestic production.
There are 14 ingot steel manufacturers in the market whose total output accounts 73 percent of the market share.
Hoa Phat Group is the largest with 25 percent of the market share. The remaining hundreds of small enterprises account for 27 percent of the market share.
As for steel rods, there are 21 manufacturers which hold 93 percent of the market share. Hoa Phat alone holds 20 percent, while dozens of small enterprises make up 7 percent of total output.
These figures are based on an investigation taken on the proposal by four steel manufacturers namely Hoa Phat, VnSteel, Tisco and Viet Y which make up 38.6 percent of domestic ingot steel and 34.2 percent of steel rod output.
To improve that imports are threatening domestic production, the four enterprises cited the statistics that the ingot steel imports have increased sharply from 466,817 tons in 2012 to 1.502 million tons in 2015, while the figures were 387,470 tons and 1.215 million tons in 2015.
However, MOIT’s decision, while applauded by the four enterprises, has faced strong opposition from other steel manufacturers.
Pomina (POM), Vinausteel, Nasteel Vina, SSE and Vinakyoei have proposed that MOIT not apply the safeguard measure.
They warned that if the import tariff on ingot steel is raised from 9 percent in late 2015 to 45 percent, this would lead to a selling price increase, which will place big difficulties on steel manufacturers.
They also pointed out that Hoa Phat, one of the four enterprises that proposed safeguard measures, does not meet difficulties or take losses.
According to HSC Securities, Pomina may bear adverse effects from the decision, while Hoa Phat and Viet Y will be the biggest beneficiaries.
“Earlier this year, some steel mills like POM decided to import ingot steel instead of scrap steel to laminate steel domestically. Pomina would bear adverse effects from the new decision,” HSC said.
