I. Domestic Market for Stainless Steel Products (INOX):
At the moment, there are no hot-rolled stainless steel factories in Vietnam, but there are two cold-rolled stainless steel manufacturing companies, who are still importing stainless steel hot-rolled coils for re-rolling purposes:
Posco – SS VINA with capacity of 180, 000tons/year located at Ba Ria-Vung Tau, Vietnam. Their product ranges are 0.4 – 3.0mm x 1250mm.
Inox Hoa Binh – Hoa Binh Manufacturing and Trading Ltd. with capacity of 50,000tons/year located at Hanoi, Vietnam. Their product ranges are 0.3- 3.0 mm x 1250mm.
According to credible field specialists and organizations (Markus Moll, HSBC, etc), direct research of Vietnamese domestic steel markets, and Nguyen Minh Steel’s long-term customers, the demand of stainless steel products will increase rapidly due to need, and the change in preference from carbon steel products to stainless steel products. In addition, the GDP of Vietnam and other Southeast Asian countries are still rising and are more stable compared to other regions.
Moreover, Vietnam has imported 300,000 tons of hot-rolled stainless steel products and cold-rolled stainless steel products as of the end of June 2016, and it is forecasted that another 300,000 tons will be imported by the end of 2016. If the trend is stable, the domestic demand of stainless steel will increase 6-8% annually. The global demand is about 4.6% from 2016-2018, and specifically, USA and China will have strong demand increase of about 6.3% and 6.6%, respectively.
China: 14kg/person/year.
Taiwan: 24kg/person/year.
Japan: 19kg/person/year
Vietnam: 5-6kg/person/year.
However, recently both Posco and Hoa Binh Inox’s requests to Vietnamese government to enforce A.D policy against China on cold-rolled stainless steel coils/plates was approved for 27% import tax.
In addition, there is also a rapid increase in demand of welded stainless steel pipes in Vietnam. Their main purpose is for interior decoration products and construction. At the moment, there are only 1 or 2 factories supplying stainless steel pipes. These are Huu Lien A. Chau Steel and Minh Ngoc Steel. They only have about 20,000tons/year capacity combined.
Overall View of the Demand:
- The cold-rolled stainless steel manufacturing process in Vietnam is heavily dependent on the import of hot-rolled coils from other countries.
- The domestic supply of cold-rolled stainless steel coils only satisfies 40% of the domestic demand.
- The cold-rolled stainless steel products with 0.3mm and below are still needed for import. The major uses of 0.3mm and below are for high quality interior decoration products and high technology electronic components
- Currently the domestic supply of stainless steel pipes only meets 30% of the demand.
II. Carbon Galvanized/galvalume Steel and Color-Coated Steel:
Vietnam currently has some factories that are manufacturing cold-rolled steel, and galvanized/galvalume steel. Color-coated steel has modern technology, a large scale, stable market share, such as Hoa Sen Steel, SUMIKIN Steel, Nam Kim Steel, VSC Steel, and Thong Nhat Steel. The total capacity is about 2 million tons annually. However, there are other steel companies like Viet Phap Steel, Viet Y Steel, and LILAMA Steel. These companies, which have their factories located in north Vietnam only, installed their galvanized/galvalume line and color-coated line (no investment for wide width cold-rolled line) with a capacity of about 400,000tons/year. These companies are still obtaining their cold-rolled material by buying other steel factories from south Vietnam.
On the other hand, Nguyen Minh Steel, with 20 years in the industry, has built up their brand credibility and has good customer satisfaction from both domestic and global markets in steel pipes, galvanized steel products, and cold-rolled products (narrow and medium width 650mm). For years Nguyen Minh Steel’s customers requested to diversify their products including wide width galvanized/galvalume steel coils and color-coated steel coils due to convenient purpose and active business strategy. Nguyen Minh Steel passes on many opportunities to supply their loyal customers and to gain new customers by being unable to close the gap of galvanized/galvalume and color-coated product diversification. In some cases, Nguyen Minh Steel has had to buy from other factories in order to supply their customers.
Overall View of the Demand:
There is a shortage of supply material for cold-rolled, galvanized, and pre-painted wide width coils in north Vietnam.
III. Conclusion:
The company recognizes the need for investment in a complete facility, which will supply stainless steel hot-rolled steel, stainless steel cold-rolled steel, wide width cold-rolled carbon steel, galvanized steel, and pre-painted steel. With this factory, we can not only close the demand gap for these products in the domestic market, but we can also differentiate ourselves on much larger scale. We will enter a new business field that no other steel companies find difficult to manage, but with 20 years in this industry, Nguyen Minh Steel has enough experience, knowledge and sale capability to execute this project successfully.
Efficiency:
Market share:
When this project is in full operation, the Nguyen Minh Steel brand will increase their own credibility and competitiveness in both the domestic and global market.
With a variety of products like stainless steel pipes, hot-rolled stainless steel coils, cold-rolled stainless steel coils, wide width carbon cold-rolled steel coils, galvanized coils, galvalume coils, color-coated steel coils, and other currently existing products, Nguyen Minh steel will be much more active, immune and able to control the production plans/schedules and distribution without relying and depending on importing from other countries and other domestic well-known steel companies.
Profit forecast:
Stainless steel production:
This will be the first complex factory which manufactures both hot-rolled and cold-rolled stainless steel in Vietnam. The project has a low, reasonable investment and uses high-end modern technologies from Europe and the USA. With these advantages, the high quality products will be able to enter high standard markets around the world.
Profit forecast is about $500USD/ton (1,100,000 VNĐ/ton) from transforming raw material (scrap material) into cold-rolled stainless steel coils. This profit forecast excludes stainless steel pipe making processes.
Carbon galvanized/galvalume color-coated steel production:
Although there are other factories involved in this market with high competitiveness, our high quality can match that competition and will be able to export to high standard markets around the world by using both European and American modern technologies. In addition, our mills and lines have acceptable capacity (250,000 tons/year) and a low-budget investment, so the production is very efficient.
Profit forecast is about $120USD/ton (2,600,000 VNĐ/ton) from raw materials to color-coated steel coils.
Therefore, with only 2.4 billion VNĐ, this project is very efficient and promising with a 3 year return on investment.
