Asian Metal: Good afternoon, Mr. Nguyen. Thanks for agreeing to the interview. Please could you briefly introduce your business scale and main products?

Mr. Nguyen: My pleasure. SMC Trading Investment JSC (SMC) played as a small material shop when founded in 1988, but it has more than 6 branches and 3 joint ventures with a total of 900+ employees now after the 32-year development. The steel trading volume exceeds 1,300,000 metric tons in 2020. Therein, flat steel and long steel accounts for 50% each. We mainly involve in three parts of steel business. Steel trading, such as HRC, CRC, PO, GI, EG and so on; steel production, including hot-rolled galvanized coil and steel pipe; steel slitting and cutting service.

Asian Metal: Where do you sell materials to? How about customer distribution?

Mr. Nguyen: Our main market stays around Ho Chi Minh City (South Vietnam), and we have 1 coil center in Da Nang (Middle Vietnam) and 1 joint venture in Ha Noi (North Vietnam). Our customers range from industries of projects, construction, pipe making, steel structure, home appliances, etc.

Asian Metal: With Formosa Ha Tinh Steel Corporation (FHS) and Hoa Phat Steel stating to produce HRC, traders and end users in Vietnam rely less on materials from China. Do you also reduce the purchasing volume from China this year?

Mr. Nguyen: When Formosa Ha Tinh Steel Corporation (FHS) launched production officially in 2017, we reduced 30% to 40% of the imported volume. If the prices of Formosa Ha Tinh Steel Corporation (FHS) and Hoa Phat Steel remain attractive and the quantity could meet our need for production and service centers, we plan to reduce the purchasing volume from China further next year. However, we have to rely on imports for some special steel grades used for automobile or home-appliance since neitherFormosa Ha Tinh Steel Corporation (FHS) nor Hoa Phat Steel could produce.

Asian Metal: According to Asian Metal database, the HRC import volume of Vietnam decreased by 22% YOY in 2018, but it witnessed the YOY increase of 49% in 2019. In 2020, the volume dropped by 37% YOY. Does the government of Vietnam encourage local steel mills to produce HRC so as to reduce the import volume? What about the proportion of imported HRC against the local materials at the moment?

Mr. Nguyen: Lots of GI factories launched production in 2019, leading to the increased demand for HRC, and that's why the HRC import volume surged that year. Actually, local government remained neutral about importing HRC. The imported HRC roughly accounts for two-thirds now.

Asian Metal: HRC export prices from China witnessed a total markup of about 13% (USD70/t) in November, and those from South Korea increased by about 15% (USD80/t) during the period, stimulating traders in Vietnam to raise prices by approximately 17%. How about the market performance after the continuous prices increase? Do you think the prices would go up further in the foreseeable future?

Mr. Nguyen: At present, the whole world faces serious shortage of HRC affected by the COVID-19, so prices would continue to increase in the coming one or two months at least. Mills in Japan had to stop 6 out of 15 blast furnaces early this year dragged by the shrinking demand, but the country restarted the No.2 blast furnace in Chiba boosted by the improved demand in October. With more and more steel mills resuming production, the supply of HRC would increase day by day, which may drag down prices, but it takes time. Therefore, we believe prices of HRC might keep at the current high level before the second quarter of 2021.

Asian Metal: How about the demand for flat steel in Vietnam this year? Will it become stronger in 2021?

Mr. Nguyen: The demand for flat steel in Vietnam remains strong this year, and it would absolutely get stronger next year. A lot of companies and supply chains moved to Vietnam this year for fear of the escalation of the Sino-US trade war. More and more Chinese and South Korean enterprises might move to Vietnam to avoid the Chinese-originated raw materials in 2021.

Asian Metal: How do you think the HRC market prospect in 2021?

Mr. Nguyen: With Formosa Ha Tinh Steel Corporation (FHS) and Hoa Phat Steel, the only two existing HRC producers in Vietnam, enlarging production gradually, prices of HRC in Vietnam might become more competitive in 2021. End users from industries such as steel pipe production, GI production and exporters to Europe and the United States could also gain more advantages since the Vietnamese-originated products enjoy the zero-tax treatment according to the agreements like the CPTPP, EU-Vietnam Free Trade.

Asian Metal: What's your biggest challenge at present? What about your advantages?

Mr. Nguyen: The increasing anti-dumping (AD) investigations in Vietnam play as the largest challenge for us at the moment, which make prices of some steel products unreasonably high and less competitive. Fortunately, we build harmonious relationship with local producers. Besides, we have steel service center as well, which guarantees us steady outcome by cooperating with end users directly. The steady income enables us to build sufficient materials in turn.