News / Vietnam steel giant Hoa Phat moves into container manufacturing

Hot-rolled coil steel produced by Hoa Phat: Credit: Hoa Phat Group

South-east Asia’s largest steelmaker, Vietnam’s Hoa Phat Group, is moving into container manufacturing.

It sees potential synergies with its core steel production business.

Hoa Phat began building its factory, Hoa Phat Container Manufacturing, in Vung Tau province in December and it is expected to be up and running towards the end of this year, with an annual output of 500,000 teu, all using steel produced in-house.

Hoa Phat’s diversification follows the strong demand for container shipping that precipitated an equipment shortage, and coincides with South Korea’s state-sponsored move into container manufacturing, also involving building a factory in Vietnam to tap into its lower labour and land costs.

Founded in 1992 as a trading company for construction equipment, Hoa Phat began steel-making in 1996 and currently produces eight million tonnes of steel annually. Capacity expansions could see up to 14m tonnes a year by 2024.

The aim of both Hoa Phat and South Koreais to reduce Chinese fims’ monopoly on container manufacturing via majority state-controlled China International Marine Containers and Dong Fang and privately owned CXIC, which manufacture 96% of containers in the world.

“Hoa Phat Group has advantages of big-scale production and being active in material resources as well as experience in manufacturing. These factors have ensured high quality and reasonable prices for its cargo containers to compete with Chinese products,” said Vu Duc Sinh, director of the Hoa Phat Container Manufacturing JSC.

In 2007, Vietnam Shipbuilding Industry Group opened the Vinashin-TGC container factory, producing 45,000 teu annually, but ceased operations when Vinashin collapsed with $4.5bn debt in 2010.