Steel and iron exports to the UK increased rapidly since the UK – Vietnam Free Trade Agreement came into force on May 1, 2021. (Photo: VNA) The deal also enhances cooperation with the UK in accelerating thedecarbonisation process of the iron and steel industry as Vietnam was strivingto achieve net zero by 2050.
Nguyen Canh Cuong, Trade Counsellor at Vietnam’s Embassy in the UK, in aninterview with Vietnam News, said that high-grate steel production usingdecarbonisation technology was a potential industry in which the two countriescould strengthen cooperation. The decarbonisation technology allowed lowerpower consumption and carbon emissions than traditional production.
Since the UKVFTA came into effect on May 1, 2021, Vietnam’s export of steel andiron products saw a dramatic rise in the context that the UK increased theinvestigation and application of trade remedies on steel and iron productsoriginating from several other countries.
Statistics of the Ministry of Industry and Trade showed that steel and ironexports of Vietnam to the UK increased by 1,269% in 2021 over the previousyear, one among the fastest growing exports to the UK besides vegetables (82%),pepper (49%), rattan products (56%) and ceramics (32%).
Customs statistics showed that the export of iron and steel products to the UKtotalled nearly 419,000 tonnes in 2021, worth more than 491 million USD,compared to the volume of just 51,851 tonnes and the export value of 35.88million USD recorded in 2020.
Iron and steel products exported to the UK saw rapid growth after the tradedeal was put into effect. In the period from January 1 to April 30, 2021 beforethe trade deal came into force, the iron and steel exports to the UK was just32,000 tonnes worth more than 38 million USD.
The UK Department for International Trade revealed that iron and steel was oneamong the top five goods imported to the UK from Vietnam in the four quartersto the end of the first quarter of 2022 with a revenue of 336.8 million GBP (390million USD) or 7.2% of all UK goods imported from Vietnam.
Other products in the top five included telecoms and sound equipment (1.4billion GBP or 29.7%), clothing (1.4 billion GBP or 29.7%), footwear (334.8million GBP or 7.1%) and furniture (329.9 million GBP or 7%).
According to the Vietnam Steel Association, steel and iron products of Vietnamwere mainly exported to ASEAN, the US and China while the export to the UKremained modest. The UK imports of iron and steel totalled 7.33 billion USD in2021, statistics of the United Nations Comtrade database on international tradeshowed.
Thus, there was still significant room to promote the exportation of steel andiron products to the UK, especially if steel makers could grab theopportunities arising from the UKVFTA, the association said.
The association pointed out that the steel industry of Vietnam had beenwitnessing a dramatic change in the structure of export markets since 2021,with exports to major markets like ASEAN and China seeing drops while exportsto the US, EU and the UK increased rapidly.
Impressive increases in steel and iron exports to the US, the EU and the UKcontributed to allowing steel to enter the club of goods with export turnoverof 10 billion USD or higher last year. Steel exports hit the milestone of 10.8billion USD in November 2021 and became the product with the fastest growthrate in export, up 129.8% over the same period last year.
Although steel exports slumped from the beginning of this year on weak globaldemand, the UK and the EU which had free trade deals with Vietnam, remainspotlight markets.
The latest updates from the General Department of Customs showed that the UKimported nearly 83,500 tonnes of steel and iron, worth 116.4 million USD in thefirst seven months of this year. Steel exports to the EU were estimated at 1.1million tonnes, up 18.1% in the period.
According to Vietnam Steel Association, in the context of increasingprotectionism, diversifying export markets is vital for the domestic steelindustry, in which, the free trade deals like the UKVFTA are providingsignificant opportunities to expand exports.
However, it is necessary for Vietnamese steel makers to improve technology andrenovate production and business methods to be able to expand exports in the UKand the EU which had high requirements for product quality, the associationsaid.
Technology renovation
The Ministry of Industry and Trade in a report to the Government about theproposal to develop a strategy for the steel industry to 2030 with a vision to2050 pointed out that the competitiveness of the steel industry remains lowwith heavy dependence on imported materials, together with small productioncapacity, outdated equipment and technology which are causing energy waste andposing risks to the environment.
The ministry proposed policies be raised to build a strong steel industry whichis important to promote the country’s development toward industrialisation andmodernisation, including policies to encourage renovations in steel productiontechnology.
Green steel, or the manufacturing of steel without the use of fossil fuels, isbecoming a trend in the world as the net zero target by 2050 is putting thesteel industry under pressure to act.
The steel industry was one of the biggest CO2 emitters. Wordsteel's statisticsshowed that today, worldwide, on average 1.85 tonnes of CO2 are emitted forevery tonne of steel.
Vietnam should consider moving toward green steel to increase exportssustainably and reduce impacts on the environment if the country is to meet thenet zero carbon emissions target by 2050, the steel association said.
Cuong from the Vietnam’s Embassy to the UK stressed that Vietnam could enhancecooperation with the UK in promoting the decarbonisation of the steel industry./.
VNA
