Metals & Mining Theme, Ferrous

February 12, 2025

Vietnam's Hoa Phat targets late-2025 startup of Dung Quat 2 steel project

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HIGHLIGHTS

Crude steel output expected to reach 15 mil mt/year

Startup expected to support key national projects

Hoa Phat eyes railway project

Vietnam's Hoa Phat expects to finish the construction of its Dung Quat 2 expansion project by the end of 2025, about a year later than expected.

Hoa Phat Group's crude steel production capacity is expected to reach 15 million mt/year upon completion, the steelmaker disclosed during Vietnam's Prime Minister Pham Minh Chinh's visit to Hoa Phat on Feb. 9.

Hoa Phat had initially expected to complete the Hoa Phat Dung Quat Steel Integrated Complex No. 2 Project by the first quarter of 2025, boosting its crude steel production capacity by about 76.5% from a current 8.5 million mt/year.

The delay follows a global decline in steel demand in 2024, which caused spot prices to slide. Platts pricing data from S&P Global Commodity Insights showed that SAE1006 grade hot-rolled coil prices fell to $485/mt CFR Southeast Asia on Dec. 31, 2024, from $600/mt on Jan. 2, 2024. Hoa Phat has noted that the domestic HRC market in 2024 struggled due to intense competition from an influx of low-cost imported steel, particularly from China.

Hoa Phat filed an antidumping complaint regarding Chinese HRC imports in March 2024, which remains under investigation, with expectations that a final decision may not be reached before June 2025.

The project will add 5.6 million mt/year of HRC production capacity to its designed output of 3 million mt/year, which can be increased to 3.5 million mt/year depending on the types of flat products manufactured.

The majority of Dung Quat 2's steel product capacity will be HRC, with the remaining output producing rebar, wire rods, coated steel and semi-finished products. The increased HRC production from Hoa Phat is anticipated to mostly satisfy domestic demand, which has previously depended on imports.

Vietnam's HRC imports rose 30% to more than 12 million mt in 2024, data from Hoa Phat showed.

Vietnam imported 9.03 million mt of HRC from China in 2024, according to S&P Global Market Intelligence's Global Trade Atlas.

Infrastructure projects

Hoa Phat said its "priority is to complete and fully operate" the complex, "while continuing to invest in the deep processing of high-quality steel products in the Dung Quat Economic Zone, with the goal of becoming self-sufficient in production to support key national projects."

The company said one of the projects being considered is a "high-speed railway along the North-South axis."

On Nov. 30, 2024, Vietnam's National Assembly approved plans for the railway, which will cost about $67.3 billion to build. Construction is expected to begin in late 2027 and end in 2035.

The 1,541-km long railway will connect 20 cities and provinces, including major industrial and municipal hubs such as Hanoi, Ninh Binh, Nghe An, Da Nang, Dong Nai and Ho Chi Minh City.

The railway project will benefit the local steel industry as the Vietnamese government prioritizes the use of domestic steel.

"Hoa Phat Group is confident in its ability to produce rail steel, steel for train axles and steel for high-speed trains as requested by the prime minister, as well as high-quality steel for key national projects and exports," said Tran Dinh Long, chairman of Hoa Phat Group.

In 2024, Hoa Phat produced 8.7 million mt of crude steel, rising 30% year over year amid a 20% increase in steel product sales to 8.1 million mt against 2023. Its HRC production in 2024 was about 5% higher at 2.93 million mt.

Platts, part of Commodity Insights, assessed SAE1006 grade HRC at $481/mt CFR Southeast Asia on Feb. 12, unchanged day over day.


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