Vietnam steel output surges as industry shifts toward higher-value products

Vietnam’s steel industry is shifting from a phase of capacity expansion toward optimizing its value chain, with crude steel output providing scale, hot-rolled coil (HRC) emerging as a new growth driver and construction steel continuing to underpin domestic demand.

Vietnam produced 17.92 million metric tons of crude steel in the first seven months of 2026, up 28% from a year earlier, according to a report by the Vietnam Steel Association (VSA). The growth outpaced the 11.4% increase in the overall industrial sector.

The sharp rise in crude steel output reflects both the expansion of production capacity and a shift toward more integrated steelmaking, from upstream production to downstream processing.

According to the World Steel Association, Vietnam produced about 15.2 million tons of crude steel in the first half of 2026, up 26.9% year-on-year, keeping the country among the world’s top 10 steel producers. Vietnam’s growth rate was significantly higher than that of the global steel industry.

Finished steel production reached 21.4 million tons in January-July, up 15.4% from the same period last year, with most product categories recording growth. Cold-rolled steel and coated steel were exceptions, falling 10.2% and 13.5%, respectively.

Finished steel sales rose 15.6% to 21.19 million tons. Construction steel and HRC posted solid growth, while cold-rolled and coated steel sales declined 1.6% and 9%, respectively.

Domestic demand supports growth

Vietnam’s steel market got a boost from improving domestic demand in January-July.

Construction steel remained a key contributor to consumption. Meanwhile, HRC production and sales also benefited from rising domestic demand as local producers expand their ability to supply flat steel products, VSA said.

Steel imports reached an estimated nine million tons in the period, worth more than $6.68 billion, up 4% in volume and 7.5% in value from a year earlier.

Exports of finished steel products rose 4.2% to an estimated 6.69 million tons, with export value increasing 7.4% to $4.54 billion.

Although Vietnam remained a net steel importer, faster export growth than import growth was seen as a positive sign for the industry, particularly as domestic producers seek to move further up the value chain, the association noted.

Protectionism, carbon costs pose challenges

The local steel market’s outlook remains subject to several structural challenges, VSA said.

Global steel overcapacity is prompting major markets to strengthen trade defenses, increasing the risk of protectionist measures against Vietnamese steel exports.

At the same time, producers face growing pressure to reduce greenhouse-gas emissions in line with Vietnam’s climate commitments and the introduction of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which is expected to become an increasingly important factor in the competitiveness of steel exports.

The industry also remains heavily dependent on imported raw materials, including iron ore, scrap steel, and coking coal, leaving producers exposed to fluctuations in global commodity prices and supply conditions.

For Vietnam’s steelmakers, the next phase of growth is likely to depend less on simply adding capacity and more on improving efficiency, expanding higher-value products such as HRC, and strengthening control over the broader production chain while reducing carbon intensity.