Vietnamese steelmaker Hoa Sen group has scrapped its steel expansion project mid-way as a supply-side reform measure, according to media reports.
The project could have doubled Vietnam’s steel output, however, the fear of oversupply pressuring prices has put brakes on the project. Under this project, the construction of steel complex with multiple blast furnaces was commenced in 2017 and Hoa Sen, which is known for production of steel sheets and pipes, had plans to move into upstream production. A lack of government support and public protests also forced the company to abandon the project mid-way.
The ASEAN region is already reeling under oversupply of steel, led by China. The country is already expanding its production activities in Southeast Asian countries amid capacity replacement in the domestic market. Against this backdrop, SEASI believes if all the planned steel projects in the region are implemented, the region may have to deal with an overcapacity of 61.5mn mt every year. For the region to absorb this glut, the association believes it could take a minimum of 20 years, state media reports.
Earlier, Davis Index had reported about the company selling two of its six companies involved in the $10bn project.