Vietnamese mills turn off blast furnaces to survive

Two Vietnamese companies shut down their blast furnaces to minimize financial losses.

Vietnam's Hoa Phat Group will shut down two blast furnaces at its Hoa Phat Dung Quat plant this month and plans to shut down a third blast furnace at the plant next month. Only one blast furnace will operate, which will allow the production of about 140,000 tons per month of hot-rolled coiled and structural steel. Dung Quat Steel Works produces 5.6 million tons of finished steel per year, including 3 million tons of HRC and 2.6 million tons of structural steel.

This month, the company also suspended the operation of two blast furnaces at its Hoa Phat Hai Duong plant, which has an installed capacity of 2.2 million tons of structural steel products per year. This will cut production by two-thirds, as only one blast furnace will be in operation. The company considers plant closures essential to survive during the current downturn in the steel industry.

According to a Vietnamese industry source, the operation of the blast furnaces was erratic. He notes that the company still has a large stock holding. “Therefore, losses will continue until the construction and real estate sectors recover,” he says. There are no plans to start ovens, but Hoa Phat could resume operation in the third quarter of 2023, people with knowledge of the matter say. At the end of 2024, the company planned to commission the Hoa Phat Dung Quat 2 steel complex, which will have an additional 5.6 million tons of hot-rolled steel per year.

Another steel plant, Pomina Steel, also shut down its 1mtpa blast furnace at the end of September, according to people familiar with the matter. The restart of the company's blast furnace will depend on the market situation and the Vietnamese government's policy to ease the current tight credit and liquidity constraints, an industry source said.

Vietnam's other main blast furnace operator, Formosa Ha Tinh, has no plans to shut down its blast furnaces, a Callanish company source said on Tuesday. The plant informed market participants that it is now focused on the export market. However, there are rumors in the market that the mill has reduced its rolling capacity by 30-40% and that the company is instead heavily stockpiling slabs.