The bauxite alumina industry has only developed in the last 10 years with the presence of two Vietnam Coal-Mineral Group companies. All alumina produced in Vietnam is exported. The US market accounted for 27.7% of the total export value of $2.127 million.

THREE BIG CHALLENGES

According to the Aluminum Industry Development Strategy 2007-2015 with a vision to 2025 (according to Decision 167/2007/QD-TTg), Vietnam has two electrolysis plants with a capacity of 0.4 million tons/year in this period.

So far, aluminum smelting has not been successful and has only stopped at aluminum powder. Dak Nong Aluminum Plant is under construction with a capacity of 450,000 tons/year and is expected to produce the first batch of aluminum using alumina from Nhan Co Aluminum Plant in 2024.

It is forecast that the growth rate of Vietnam’s aluminum industry will reach about 7% per year. The main products of Vietnam’s aluminum industry are INGOT aluminum ingots (with the largest number), followed by BILLET aluminum ingots, PROFILE aluminum profiles and industrial aluminum. Other products: home appliances, aluminum sheet, aluminum foil, aluminum wire account for very small output.

At “Vietnam Aluminum Industry Business Forum 2023” organized by Vietnam Aluminum Profile Association (VAA) in cooperation with Office of Private Economic Development Research Board (Board IV), Mr. Vu Van Phu, Vice Chairman and Secretary General of VAA was present , present , concluded that in the context of the current recession, companies face many difficulties and challenges to keep production and business going and to protect jobs. For workers and the aluminum industry, this is no exception.

In further analysis, Mr. Phu said the aluminum industry faces three major challenges.

The first, Overcapacity. There are about 100 aluminum factories at present, mainly producing aluminum profiles. Aluminum production capacity increased sharply, about over 1.2 million tons per year, fully covering domestic and export demand.

In recent years, the capacities of the aluminum industry have become increasingly redundant. The production reaches only 70% of the planned capacity, the quantity of goods far exceeds the demand of the domestic and export markets. In the first quarter of 2023, factories were operating at only 30-40% capacity, mainly leading to the preservation of employee jobs, low sales and difficult cash flow. Meanwhile, some domestic companies engage in dumping, causing market disruption.

Monday, Trade Protection Issues. Aluminum imported from China accounts for a large part of the Vietnamese aluminum market. Cheap aluminum imports from China have hampered domestic aluminum production and led to stiff competition in Vietnam.

To protect domestic aluminum production from unfair competition from imported products, since 2019 Vietnam has imposed anti-dumping duties on Chinese aluminum with a temporary tax rate ranging from 2.49% to 35.58%, valid for five years and expiring in October 2024.

Tuesday, The trend in recent years to shift investment capital to the Vietnamese aluminum industry is very clear; The capital flows come mainly from Chinese aluminum producers. Typically, Xingfa Guangdong Company is a shift of manufacturing investment to Vietnam.

According to Mr Phu, following the imposition of an anti-dumping tax, Chinese manufacturers have tried to divert their direct investments to Vietnam to “clarify origin” and avoid trade aid from other countries.

At the same time, shifting manufacturing bases to Vietnam can help Chinese aluminum cleanse its origin, preserve Vietnamese origin, and benefit from the tariff incentives from trade agreements that Vietnamese aluminum enjoys to avoid trade remedies from countries like US, EU, UK, etc.

“This changing trend will directly affect the domestic market and export market of Vietnamese aluminum factories. Enterprises again face the risk of losing the domestic market for the second time, as in 2018-2019 before the introduction of the anti-dumping tax, while also facing the risk of investigation and tax evasion. Trade protection on Vietnamese aluminum is exported to EU, US and other markets,” Phu said.

LINK TO ENHANCE PERFORMANCE

However, the opportunities for the Vietnamese aluminum market are still very good. A VAA representative said that aluminum profiles are expected to dominate the market, with the construction industry being the driving force behind the Vietnamese aluminum market.

Vietnam is the fourth largest construction market in Asia. With big goals in the areas of infrastructure and housing, this is the driving force behind the development of the industry in the near future.

However, in order to improve the capacity of the aluminum industry in the current context, according to Mr. Phu, it is first necessary to examine the aluminum industry master plan to produce pure aluminum, increase aluminum recycling and access “green” “raw materials.”

In terms of trade remedies, the imposition of anti-dumping duties on aluminum profiles from China in 2019-2020 was a rescue for Vietnamese aluminum companies that were on the brink of bankruptcy and losing the domestic market. Therefore, manufacturers must review the current situation and agree with the VAA to apply to the Ministry of Industry and Trade for an extension of the decision for another five years.

The content of the article was published in Vietnam Economic Review No. 22-2023 on May 29, 2023. Welcome readers to read below The:

https://postenp.phaha.vn/chi-tiet-toa-soan/tap-chi-king-te-viet-nam