Even though Vietnamese steel industry has an average growth rate of 18% per year, its scale is still small and dispersed, and its technology remains at fairly average level, which lead to low competitiveness, dependence on outside markets, and unstable price. These damage not only consumers but also enterprises. Thus, enhancing the competitiveness of Vietnamese steel industry is both necessary and urgent.
 
First is the matter of investment to produce steel embryos, which is the very first important step affecting production and competitiveness of steel products. According to Vietnam Steel Association, in reality, output of embryos in 2006 was only 1.4 million tons, satisfying about 40% of the market’s demands.

Because the steel industry must depend much on imported input, each time the price of imported steel embryos increases, the domestic enterprises have to immediately raise the retail price. This not only damages consumers and enterprises but also influences the floor price because steel will be counted in the basket of goods in the exchange rate calculation. At least 4 steel embryo mills have been established in the last 6 months, one in Hai Phong, one in Ha Tinh to get iron ore from Thach Khe and two in Bac Kan.

Second matter lies in production phase. Although the steel industry has developed at a rather high speed with a powerful force including domestic and joint-venture mills, refined cast iron mills still use small capacity blast-furnace whilst refined steel technology most uses electric furnace with under 30 tons per time, said Ministry of Trade and Industry of Vietnam. Whereas, Vietnamese steel enterprises has to severely compete with Chinese, South Korean and Japanese ones because of the impacts of WTO accession and AFTA expansion, especially competition from Chinese steel industry. China is exporting steel at low price because its supply exceeds demand in domestic market, and at the same time it raises the price of input materials exported to regional countries.

At the moment, some foreign enterprises are asking for permission for their investment into the industry of producing steel plates and sheets in Vietnam with billions US dollars. Among them, Tata Group ( India), one of the six largest steel groups in the world, has invested about 3.5 billion US dollars to build a massive steel plant near the Thach Khe iron mine in Ha Tinh with capacity of 4.5 million tons steel rolls and plate a year. This can be considered as a new beginning of the new page in the history of Vietnam steel industry.