US-China trade tensions have pushed the US dollar (USD) high, while the yuan has fallen sharply. This is expected by experts and representatives of steel and mechanical industry enterprises to have both positive and negative impacts on domestic manufacturing industries.
According to the representative of Vietnam Steel Association, in recent time, the domestic steel industry has made many changes in quality and quantity with a fairly rapid growth. But every year, the Vietnamese steel industry still has to import a large amount of finished and semi-finished steel products from China, accounting for more than 50% of total steel imports.
Therefore, when the yuan falls sharply, there will certainly be two impacts on the commodity. On the one hand, with steel items to be imported, it will have a positive impact on businesses because they can import at competitive prices. On the contrary, when the yuan falls sharply, Chinese steel products such as construction steel, cold rolled steel, and other kinds of steel sheets, etc., can be massively imported into Vietnam, affecting the domestic market. country.
Explaining this, Mr. Nguyen Van Sua, an expert in the field of steel, said that the devaluation of the yuan will make Chinese products’ prices more competitive than Vietnamese corrugated iron and steel products. From there, it will promote more Chinese goods flooding into Vietnam. In contrast, Vietnamese goods will be harder to enter China, because Chinese people have to pay larger amounts to import the same amount of goods as before.
As for USD appreciation, Mr. Sua said that enterprises that have export contracts paying in USD will benefit in the short term. But in the long term, when the yuan / USD rate continues to fall sharply, Chinese goods will be more profitable when exported to the United States than Vietnam.
Mr. Nguyen Van Sua, expert in the field of steel. Photo: Duc Dung / BNEWS / TTXVN
According to Mr. Sua, the most radical measure to deal with Chinese steel spill over is that domestic enterprises must improve the competitiveness of products; In particular, the most competitive criteria must be price. Production input costs, production rationalization to increase price competition, while quality must be guaranteed. In the country, there are also many enterprises that have very good market share, such as Hoa Phat, Hoa Sen, Steel Corporation or Posco … , stabilizing exchange rates in the coming time …
Sharing the same view, Mr. Pham Chi Cuong, Chairman of Vietnam Association of Foundry and Metallurgy, and a expert in steel industry, said that China is one of the major steel exporters. best of the world. Each year, the country exports tens of millions of tons of steel sheets of all kinds. The devaluation of the yuan will create favorable conditions for Chinese steel products to enter Vietnam.
Many experts believe that the depreciation of the yuan will help reduce the price of Chinese steel products, increase the price competitive advantage. Most likely, next time, Chinese steel will enter Vietnam in larger quantities. Especially in the context of the US-China trade war, the Chinese steel in Vietnam, in part, will help to release the leftover goods in this country, a part will probably “disguised” goods. Vietnam to evade taxes and export to third countries.
Not only the steel industry, with mechanical engineering, domestic production of spare parts was also greatly affected by this war. According to Mr. Nguyen Van Ket, Director of SKD Vietnam Engineering Co., Ltd., a lower yuan will create favorable conditions for businesses to import spare parts to produce cheaper prices than before. But on the other hand, in the long run, businesses also face low-cost products, sold on the same market in the domestic market and export.
“This is not a new issue when evaluating, because we have also analyzed and forecasted the impact of this trade war. It is important for the enterprise itself to restructure production and products sold with quality and reasonable price. So, just keep the customers in the foreign market. We are also working with Japanese businesses to restructure production and cooperation, supply of goods with them, “Mr. Ket said.
Theo Đức Dũng