Vietnam's domestic steel demand is expected to improve in the second half of 2023 with a modest growth of 1-2%, Vietnam Steel Association (VSA) secretary general and vice chairman Dinh Quoc Thai told delegates at Kallanish’s Asia Steel Markets 2023 conference in Ho Chi Minh City on Wednesday.

While Vietnamese steel demand has so far been slower this year, it has the potential to improve on the back of the country's GDP growth forecast of 6.47-6.83% in 2023. Domestic steel consumption is expected to grow amid increased public investment disbursement on infrastructure and the recovery of post-Covid civil construction activities.

However, Vietnam faces challenges, including slower macroeconomic growth, complexities in the restructuring of state-owned enterprises and credit institutions, and the existence of bad debt. On the steel front, Vietnam faces oversupply of certain steel products such as construction, cold rolled and galvanised steel, as well as high dependence on imported raw materials and higher costs associated with green steel production.

Slow disbursement of only 50-53% in public investment last year caused domestic demand to slow down. This will seriously affect steel demand in 2023 and may continue if new policies are not implemented, said Thai. Vietnam's crude steel production reached 20 million tonnes in 2022, down 13% year-on-year. Vietnam's apparent steel consumption last year rose marginally, by 0.81% to 22.23mt (see table below).

In the long term, steel growth prospects for a developing country such as Vietnam are good, Thai observed. The country's population is expected to reach 104 million by 2030 and steel consumption per capita, currently at 240 kg/person, is expected to increase to 290 kg/person by 2030. Demand for high-quality fabricated and alloy steel is expected to rise too. VSA forecasts that Vietnam's total steel demand will hit 30-32mt by 2030.