Taiwan-Japan Steel Venture to Set up $1.7 Million Ton Plant in Vietnam

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Researched by Industrial Info Resources (Sugar Land, Texas)--Vietnam-based steel producers can benefit from the country's membership with the Association of Southeast Asian Nations (ASEAN) by avoiding tariffs on exports to Southeast Asia where demand for steel is on an upward curve.

Taiwan's China Steel Corporation (Taipei) and Japan's Sumitomo Metal Industries (Tokyo/Osaka) are planning a joint venture, which will see the construction of a plant with an annual production of 1.7 million tons of steel product. Covered in the scope of the project will be a continuous cold-rolling mill, a continuous galvanizing line and electromagnetic steel sheet production equipment. The plant will be in a suburb of Vietnam's capital of Ho Chi Minh City.

A feasibility study on the $1.15 billion project is now underway, and China Steel will contribute $293 million in a direct investment to the project. The two companies have already worked together on the East Asia United Steel Corporation and have made joint investments in coil steel centers in Thailand and Vietnam. Production at the plant is expected to begin in 2011.

Prices for steel products are set to rise globally in 2008, and shortages of various products types are looming in Southeast Asia. Although Vietnam is experiencing an inflation rate of 8.3%, the country's low labor rates continue to make it an attractive destination for foreign direct investments (FDI) in industrial projects. The country's growth rate of 8.5% in 2007 was the fastest rate for 11 years. Industry and construction made up 42% of the country's economy followed by the services sector with 38%. After 20 years of market reforms, Vietnam joined the World Trade Organization (WTO) in January 2007 and experienced a record FDI inflow of $20.3 billion investment pledges during the year after promising to further increase accessibility to foreign business under WTO rules.

Vietnam is looking at total export revenues of more than $58 million in 2008, up from an estimated $48 billion in 2007 and $39.6 billion in 2006. In 2008, export estimates include 16 million tons of crude oil and 30 million tons of coal. Regional steel product exports will see growth through the next five years.

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