Industry Focus

Demand and Supply Trend of
Steel Raw Material and Wire in Vietnam's
Fastener Industry
Foreword
In recent years, Vietnam has maintained a very impressive
growth rate. Even in 2020, the worst year of the epidemic,
due to corporate supply chains moving out of China against
the backdrop of the US-China trade war, it still maintained
a 2.91% growth and was one of the major economies in
addition to Taiwan that still maintained positive economic
growth. As the impact of the epidemic subsided, Vietnam's
GDP growth rate in 2022 was around 8.02%, the highest in
12 years. Compared to the ASEAN’s average GDP growth of
4-5% in 2022, Vietnam's growth rate was nearly two times
higher. Although Vietnam's GDP per capita is still one of
the lower GDP growth rates in the ASEAN (only higher
than the Philippines, Laos, Cambodia, and Myanmar), its
overall trend of growth momentum remains unchanged andcontinues to support its position as an important ASEAN
country. The geopolitical rivalry between the US and China(from the trade wars during the Trump administration to the
sanctions and regulations during the Biden administration)
has made Vietnam a winner. Many of China's laborintensive industries have been moving south, and Vietnam,
because of its advantages, has often been the best "China
plus one" option for many companies. Compared to many
competing economies, Vietnam has signed numerous trade
agreements with various countries/regions in just over 10
years after joining the WTO in 2007 and the signing of free
trade agreements such as the Vietnam-EU EVFTA has also
shown Vietnam's ambitions beyond the regional economy.
For the fastener industry, with geopolitical considerations

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Fastener World no.202/2023 惠達雜誌and related industries to move as an inevitable trend, which isrelatively low-margin labor-intensive fastener industry, moving into
Vietnam is a very important advantage. The second advantage is theVietnamese government’s investment in business and infrastructuredevelopment. Compared to many competing countries, the fastenerindustry’s logistics benefited by Vietnam's infrastructure are
gradually improved.
Before the epidemic in 2020, Taiwanese fastener industry graduallydeveloped in Vietnam, forming different types of fastener industry
clusters in North, Central, and South Vietnam. In North Vietnam
are mostly fastener clusters for automobile/ motorcycle, electricalappliances, communications electronics, ships, and electronics
fasteners are one of the main product categories supplied; in
addition, Vietnam promotes the automobile and motorcycle
manufacturers to set up large factories. Thus far, there are about
50 automobile assembly factories in Vietnam. In addition to the
Mercedes-Benz and Isuzu setting up factories in Ho Chi Minh City,
most of others in the province are located in Vinh Phuc (Vinh Phu),
Quang Ninh, Hai Phong Province, and the northern region of theProvince of Binh Ninh. Honda and Yamaha Motors have long been
manufacturing in the vicinity of Hanoi, North Vietnam. The Italian
Piaggio plant is located in Vinh Phuoc province. The market demand
for automobile and motorcycle fasteners forms the automobile andmotorcycle fastener supply clusters. It mainly consists of Hanoi City
as the supply center and the surrounding fastener manufacturing
factories in the provinces of Bac Ninh, Phu Thuy, Bac Giang, Hai
Duong, Thanh An, and Taiping. Formosa Ha Tinh Steel is a major
supplier of cold-heading steel wire and rod to the fastener industry.
Hai Phong Port and Quang Ninh's Gai Nei Port are the two major
ports in North Vietnam. Laixian International Gateway Port in Hai
Phong is the first deep-water port in the region and started operationin 2018. With a water depth of 14 meters and a mooring area of 750

Industry Focus
meters, Laixian Port can reliably berth large container ships ofup to 100,000 DWT. The new deep-water port, equipped withcomprehensive infrastructure and loading/unloading technology,
will increase Hai Phong Port's throughput to 30 million metrictons per year and reduce the time required for shipping toEurope from 30 to 23 days, to the east coast of the U.S. from 35
to 27-30 days, and to the west coast of the U.S. from 20 to 1315 days, representing an advantage for seaborne transportationin the region. For steel that cannot be supplied by Formosa Ha
Tinh Steel, it can be directly imported by sea transportation. Da
Nang is the largest port in central Vietnam. Da Nang is locatedat the west coast of Han River estuary in the central coast ofVietnam, on the south side of Da Nang Bay, which is the endof the East-West Economic Corridor and the largest seafoodexport port in Vietnam. However; there is no obvious fastenerindustry cluster in central Vietnam, therefore, the demand
for steel wire and rod is mainly for infrastructural use, suchas rebar, spot welded wire mesh, bamboo welded wire mesh.
In the early days, South Vietnam’s fastener cluster mainly
supplied fasteners to meet the demand of local woodworking
industry and daily DIY use. Later, Taiwanese companies andnon-Taiwanese companies set up export-oriented fastenerfactories in Vietnam. In addition to Mercedes-Benz and Isuzu
Automobile setting up factories in Ho Chi Minh City, Taiwan's
Sanyang Motor and Kwang Yang Motor have also brought
dozens of motor-related associates from Taiwan to Vietnam.
Industries in the region have formed clusters, mainly in Binh
Duong and Dong Nai provinces that form a supply chain area,

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Fastener World no.202/2023 惠達雜誌with Binh Duong province gradually becoming the center of thefastener manufacturing industry. Considering the development ofbusiness, trade and transportation needs, the region has been
expanded to Long An Province, Can Tho City, and recently to
Tay Ninh Province. The Port of Ho Chi Minh (Saigon Port) was
once the most important distribution center for steel wire and rod
in South Vietnam. Due to urban plannings, the Port of Saigon will
be relocated to Ba Di Tau Ton Province, 80 kilometers northeast of
Ho Chi Minh City. Tau Ton Port is located in the south of Ho Chi
Minh City and is the outer port of Ho Chi Minh City. With only
1-2 hours drive away from South Vietnam’s traditional fastenerindustry development area, Binh Duong Province and Dong Nai
Province, it has convenient transportation and has successively
attracted fastener companies to set up operations. Located in
the vicinity of the existing port of Tou-Ton and the new port ofGai Mai Int’l Terminal, it is very convenient for river and sea
transportation and companies setting up factories there to operatefrom the "factory’s point of view" to the “perspective of the entire
city business”, which has been evaluated as the most suitable
place for Taiwanese businesses to invest in steel and hardware
products in a new world. (Source: Wei Ming Wang, 2020.11, The
Development of Vietnamese Fastener Industry and the Impacts of
EU-Vietnam FTA, Fastener World Magazine No.185 (Mandarin
Version), (Fastener World Inc.), p.62~64。)
I n la nd water way is also one of the main logistics a ndtransportation ways in Vietnam. The development of inland
waterway transportation is also a logistics way for steel wire androd. 4 major inland waterway routes have been formed in North

Industry Focus
Vietnam; in the central region, rivers are the main transportation routes, but mostof them are short-distance routes of less than 100 kilometers in length, and onlyin the Quang Binh province, there is a port system. The southern region has six
waterway transportation routes, of which the Dong Nai River system and the
Mekong River system are the two main inland waterway transportation systems
in the southern region. The river waterway transportation mainly handles most of
the traditional cargoes, which are large in size and low in value and which is also
suitable for steel wire and rod shipment, but less suitable for the export of finishedfastener containers. However, the breakthrough in the development of Vietnam's
coastal shipping routes and fleet has enabled it to participate in the containertransportation activities in the southern region, and has also significantly reduced
the pressure on the north-south road transportation of the steel wire and rod used
for fasteners provided by Formosa Ha Tinh Steel.

Steel Market Demand and Supply in Vietnam
Iron & steel is a basic industry for national construction and a key industry
that must be emphasized for economic development. It is called the “mother of all
heavy industries,” as it is undoubtedly the foundation of transportation vehicles,machinery, shipbuilding, construction, and electrical machinery, and is highly
related to other industries, such as automobiles, electronic components, chassis,
machine tools, etc. The Vietnamese government has planned to become a major
steel manufacturing country in ASEAN and supported the development of thesteel industry. In addition to the establishment of the Vietnam Steel Corporation(VSC), it has also encouraged foreign companies to invest in Vietnam. Foreign
investors from Japan, S. Korea, Singapore, and Australia have invested in theestablishment of steel plants in Vietnam since around 1990. Driven by foreign
investments, Vietnam has developed its own local steel industry, which can be
categorized into three main types, including "VSC (a state-owned enterprise) and
its direct subsidiaries", "steel plants jointly owned by VSC and foreign investors",and "state-owned steel plants belonging to other state-owned industries andprivately-owned steel plants". They mainly produce steel for building materials
and downstream products such as coils, rods, welded pipes, colored steel,galvanized steel, cold rolled steel, etc. China has not directly invested in steel
plants in Vietnam, but Baosteel has built a blast furnace in Zhanjiang, Guangdong
Province, on the border between Vietnam and China; WISCO (in talks with
Baosteel for a merger) has invested in a blast furnace in Fangchenggang, Guangxi
Province; and through the "ASEAN +1" tariff-free strategy, it has laid out a plan
to expand into ASEAN's steel manufacturing industry, which is focused on the
production of upstream steel mills' hot-rolled steel products and hot-rolled steel inplate and sheet, and rolled steel products.
Among these foreign investors, Japan, S. Korea and Taiwan play importantroles. Japanese companies focus on "end-use products" and "steel raw materials"
in the steel industry. For example, Japan's Honda and Yamaha dominate Vietnam's
motorbike market and are major users of steel applications. With the national
power to promote industrial cooperation with Vietnam, S. Korea's industrial
deployment in Vietnam is mainly driven by industry-leading "POSCO" thatfacilitates "horizontal integration" and localized production. POSCO mainly
supplies steel sheet and coil (mostly midstream steel products before end-use
applications), such as POSCO-VN cold rolling mill, POSCO-VST stainless steel
mill, POSMAC high-corrosion coated steel mill, POSCO-SS-VINA reinforcing
bar and profiled steel mill, POSCO-VNPC steel mill for home appliances, and
POSCO-VHPC steel mill for automobiles. Taiwanese manufacturers going toVietnam to set up plants include Formosa Ha Tinh Steel and CSVC. Electric
furnace plant Tung Ho Steel acquired Vietnam's Fuco Steel Corp in 2016. These
companies mainly focus on Vietnam's domestic sales and expect to expand to
the ASEAN market and then other areas in the future. In the case of Formosa Ha
Tinh Steel, its products include flat steel billets, small steel billets, hot rolled steel
sheets and wire & coils, etc., with domestic and export sales each accounting forabout half of the total. CSVC, a cold rolling mill in Vietnam, mainly producescold rolled steel, hot-dip galvanized steel, and electromagnetic steel sheets,惠達雜誌 Fastener World no.202/2023

259

Industry Focus
etc. Domestic sales are the mainstay of the mill, supplemented byexternal sales, with the proportion of domestic sales being around60%, and the proportion of domestic and external sales being
adjusted according to the price. Taiwan's steel supply in Vietnam
is mainly for upstream steel mills and downstream industries,
such as steel pipes, fasteners, automobile and motorcycle parts,
etc. Upstream industries are mainly supplied to Vietnam's steel mills.
The upstream industry is mainly supplied to the local market in
Vietnam for intermediate processing in the midstream industry, andexported to ASEAN countries. For the downstream sector, if there
is no suitable subcontracting plant for intermediate processing in thedomestic market of Vietnam, or if it is not possible to supply suitablesteel for intermediate processing, suitable steel must be imported
or purchased directly from steel mills, and then processed in theirown intermediate steel production lines or in the midstream industry
plants, in order to facilitate the supply of suitable raw materials forthe downstream finished products.
Taking the downstream fastener industry as an example, upstream
steel mills mainly supply hot rolled wire coils from hot rolling small
steel billets. The steel wire & coils required for forged,formed andthread rolled fasteners are the fine-drawn wire & coils featuring
complete spheroidization or appropriate heat treatment. The processfrom hot rolling wire coils to fine-drawing wire & coils is the midstream process required for fastener production. At present, mostVietnamese fastener factories aiming at controlling the quality andcost of raw materials use hot rolled wire coils supplied by steel
mills having their own production lines to control and adjust roughdrawing, fine drawing and heat treatment and supplying wire coils forforged, formed, and thread rolled fasteners. For unavailable alloy steel
wire coils or steel types where the production lines are not capableof controlling and adjusting their properties, fastener manufacturers
always import wire coils with complete drawing and spheroidizing.
Based on the analysis of Vietnam's steel industry comprising morethan 100 companies, of which the larger ones include Formosa Ha
Tinh Steel,Hoa Sen, Hoa Phat Group, VSC, SMC Steel, VSC-POSCO(VPS), etc., it reads that the demand and supply of Vietnam's steelmarket is expected to increase at a CAGR of 10.1% from 14.67 million
tons in 2022 to 34.76 million tons in 2031. (Figure 1) According to
the World Bank's 2021 statistics, Vietnam imported 5,910,120 kg ofsteel wire (HS code 732620). In 2021, Vietnam's steel wire in termsof quantity was mostly imported from China through the ASEAN+1
tariff-free framework, followed by Thailand and Indonesia, and there
were also some imports from S. Korea, Japan, Australia, Europe, andthe U.S. The World Bank statistics for 2021 are shown in Table 1.
In 2017, Vietnam’s Prime Minister's Office put forward a draftof the "Master Plan for Steel Production by 2025 for 2035", whichstarted to eliminate low-efficiency projects and move towards
high-end products. Although the Vietnamese government hasannounced some conditions to make the domestic steel market
attractive to investors, such as “listing steel as a priority industry fordevelopment,” "rewarding 100% foreign ownership", "eliminating
tariffs within the ASEAN Economic Community", "eliminating AD
and countervailing duties imposed by the US on Vietnam's steel
products"... all of which have made Vietnam's steel market attractive.
Although there are foreign investors entering Vietnam, the production
capacity of high-grade steel is insufficient or lacking, and most of thehigh-grade steel still needs to rely on imports, which also reflects thedemand for supply of high-grade wire coils for fastener production in
Vietnam.

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Fastener World no.202/2023 惠達雜誌

Figure 1. Vietnam Steel Market CAGR Analysis
and Forecasts(Source: Research Report on Vietnam's Steel Industry 2022-2031,
ResearchAndMarkets.com)

Table 1. World Bank Statistics on Vietnam’s
Steel Wire Import in 2021
Import Origin

Value (1,000 USD)

Amount (KG)

Global

20,868.55

5,910,120

China

16,993.14

4,812,570

Thailand

918.07260,004

Indonesia

883.27250,149

S. Korea

709.03200,803Japan

391.16

110,780

Australia

249.5870,684

France185.11

52,426

Other AsianCountries

142.8140,445Germany111.0031,436

USA

89.44

25,331

Philippines

63.34

17,937

UK

35.68

10,105

Malaysia

31.14

8,819

Finland

23.08

6,536

Ireland

16.15

4,573

Italy

7.11

2,013

India

6.63

1,878

Denmark

3.64

1,030

Singapore

2.48

702

Sweden2.33

659

Netherlands

2.26

639

Switzerland

1.13

321

Pakistan

0.96

271

Source: https://wits.worldbank.org/trade/comtrade/en/country/
ALL/year/2021/tradeflow/Ixports/partner/WLD/product/732620

Industry Focus
downstream have their own specialized division of labor,
downstream fastener manufacturers can quickly obtain thewire coils with required dimensional accuracy and quality,
without the problems of delay caused by self-drawing
and reducing the quality risk of the wire heat treatment
process, and enabling them to focus on product R&D andproduction.

Pakistan
Switzerland
Netherlands
SwedenSingapore
Denmark
India
Italy
IrelandFinland
Malaysia
UK
Philippines
USA
Germany
Other Asian Countries
FranceAustralia
Japan
S. KoreaIndonesia
Thailand
China

China

ThailandIndonesia
S. KoreaJapan
Australia
FranceOther Asian Countries
Germany
USA
Philippines
UK

Malaysia
Finland
Ireland
Italy
India
Denmark
Singapore
SwedenNetherlands
Switzerland
Pakistan

Steel Wire Rod Supply Chain of Vietnam
Fastener Industry
Pickling, wire drawing, annealing and galvanizing are specificprocesses in the basic steel wire rod industry. Wire rod for fasteners is
mainly a wire rod that is selected for the necessary alloying composition
before entering the fastener process. In addition, the wire drawing andannealing processes are also subject to stringent specifications for therequired quality characteristics. The supply of spheroidized wire is the
major demand. Heat treatment is used to spheroidize the carbides in thecoils or wires to improve ductility and reduce hardness for subsequent
fastener forming process. The hot rolled coils are made of low, medium
and high carbon steel or alloy steel, through the process of pickling,
wire drawing, spheroidizing and fine drawing, with smooth surface andwithout coating treatment. The cross-section is rounded, and the scale
can be processed later.
Take Taiwan's complete fastener supply chain as an example: upstream
steel mills supply hot rolled coils of carbon steel or alloy steel; midstream
wire and rod mills are in charge of rough drawing, fine drawing,tempering and spheroidizing, and other heat treatment of hot rolled coils,
and downstream fastener manufacturers supply wire rod and coils forcold processing, such as Chun Yu, Quintain Steel, Yieh Hsing, Tycoons,
Camellia Metal and so on, which are all professional spheroidized wire
rod suppliers or subcontracting OEM factories; downstream factories aremostly for fastener forming and processing, and only a small number offastener factories have spheroidized wire rod pickling and fine drawing
processes, and very few of them do their own drawing, tempering,
spheroidizing, or heat treatment. Since the upstream, midstream and262

Fastener World no.202/2023 惠達雜誌

In terms of the regional development of Vietnam
fastener industry, since there was no steel refinery in
Vietnam to provide wire and rod in the early days, the wireand rod required by Taiwanese fastener manufacturers in
Vietnam were mainly imported from Taiwan to ensure
the required dimensional accuracy and quality such astempering and other heat treatment. In later days, inorder to reduce the costs of raw materials and overseas
shipments, they gradually purchased hot rolled wire fromlocal refineries and draw and heat treat wire by themselves.
Based on the World Bank's 2021 statistics on Vietnam's
trade of steel wire rod and the CAGR of Vietnam's steelmarket demand and supply, the total number of hot rolledwire rod supplied to Vietnam's steel market in 20232031 should be able to satisfy the actual demand, andVietnam's own development of its domestic steelmaking
industry can also meet the quantity of hot rolled wire
rod supplied to satisfy the demand. However, from thepoint of view of actual demand, the main types of steel
wire for industrial use in Vietnam are wire rod, galvanizedsteel wire, prestressed steel wire strand, cold drawn steel
wire, and annealed steel wire. (Figure 2) Although theactual demand for wire rod for fastener manufacturing
is mainly annealed cold drawn steel wire, the importstatistics do not clearly distinguish the types of steel wire
and there is no statistical analysis of the types of carbon
steel alloy steel actually demanded. Based on the analysis
of wire rod types Formosa Ha Tinh Steel can provide in2023 (Table 2), Formosa Ha Tinh Steel’s current wire
rod products have already obtained JIS, MS (Malaysia),
and IS (Indonesia) certificates, and hot rolled coils havedemonstrated int’l quality competitiveness. They canadjust the quantity and size of wire rod according to themarket demand. For Vietnam fastener industry, Formosa
Ha Tinh Steel is mainly supplying the fastener industry
with commercial grade or general cold working grade,while the special cold forging grade SCWQ or heavy cold
forging grade HCWQ for fasteners are mainly supplied
to meet the demand for carbon and alloy steel categories,
which also shows that the fastener industry in Vietnam has
met the demand for the supply of the main steel types.
Since the fastener industry in Vietnam lacks large-scale
wire tempering, spheroidizing, and heat treating supply
chain in the midstream, both existing Vietnamese fastener
manufacturers and subsequent fastener manufacturers
in Vietnam need to consume more investment costs andmanagement.If there are large-scale wire tempering,
spheroidizing, and heat treating suppliers or OEM factories
in the supply chain, fastener factories are able to use theewire to produce fasteners, avoiding the risk caused by self
wire drawing and heat treatment.
Wire materials that Vietnam fastener industry needs,
whether imported or obtained from Formosa Ha Tinh
Steel, are mainly supplied based on the supply chain

Industry Focus
Figure 2. Major Steel Wire Types in Vietnam(Source: https://camasteel.com/steel-wire)

Wire rod Φ≈5mm~42mm(alloy or non-alloy)

Galvanizedsteel wireΦ≈ 8 mm Max

Cold drawn steel wire
Φ≈1mm~20mm(alloy or non-alloy)

efficiency and convenient shipment from the upstream. Although
the areas around Ho Chi Minh City and the Vietnamese fastenerclusters, such as Binh Duong and Long An, are developing
rapidly, it is difficult to solve the risk of bottlenecks in the fastener
wire material supply chain unless the government of Vietnam
has appropriate solutions to alleviate the congestion of thetransportation traffic or unless the clusters of fasteners transformor integrate on their own to form a large-scale midstream
supply chain for fasteners. The areas around the Hoa Binh Steel
Industrial Zone and the fastener clusters in Vietnam, such as Ba
Dai Tau Ton, Dong Nai, and etc., can all be suitable areas for asizable midstream supply chain of fasteners from the viewpoint of
the trend of supply chain analysis. Despite the worsening global
inflation, the supply of Vietnam's steel market from 2023 to 2031
is not yet in short supply, as Formosa Ha Tinh Steel and other steel
mills are cooperating with the Vietnamese government to develop
high-grade steel production or are still importing high-gradesteel to meet the market demand. However, for Vietnam's fastenerindustry, the midstream supply chain will affect the final fastenerproduction and the overall logistics bottleneck, which is still ahidden problem in Vietnam's fastener steel raw material supply
chain, and whether or not it will cause a substantial obstacle in the
future will be a new issue for Vietnam's fastener material demandand supply.

Table 2. Types of Wire & Rod that Formosa Ha Tinh
Steel Puts into Mass Production in 2023
Grade

MQ
Commercial
quality

Annealed steel wire(hot rolled or cold drawn)

StandardType

SAE J403

1006、1008、1010、1012、
1015、1017、1018、1022

JIS G3505
TIS 348-2540

SWRM6、8、10、12、15、
17、20、22

MS ISO 16120

C4D 、C7D、C9D、C1OD、
C12D、C15D、C18D、C20D

TCCS 46:2020/
FHS

1030K

1008、1022、10B21、
GCWQ (CHQ)SAE J403
10B21-M、10B33、10B33General Cold
SH、10B33Cr-SH
Processing
SWRCH6A、8A、10A、12A、
Quality Grade
JIS G3507-1
15A、18A、22A/ Cold Forging
Head Quality
SWRCH6A、8A、10A、15A、MS 1795:2005
Grade
18A、22A
TCCS 38:2019/50BV30、51B20-M、
GCWA
FHS
51B20-SH
SWRH42A、52A、57A、67A
GHWQ
JIS G 3506
SWRH72A
PQ
JIS G4051
S45C, SCM 435, 51B20HCWQ
JIS G3503

SWRY11AWS A5.17

EM12K

WA

AWS A5.18M

ER70S-3、ER70S-6、
YGW11、YGW12、4Si1

MA

TCCS 54:2021/
1030Cr、1033Cr、1035Cr
FHS

WQ

GB/T 24587
Pre-stressed steel wire strand (alloy or non-alloy)

264

30MnSi

Note: Hot rolled wire dia.Φ5.5~19mm;
hot rolled rod dia. Φ20~28, 30, 32mm

Article by Wei-Ming Wang, Copyright owned by Fastener World
Fastener World no.202/2023 惠達雜誌