Hoa Phat: The Steel Company That Outbuilt the State

Hòa Phát is the private company that did what Vietnam’s state steel sector was supposed to do and never managed: build integrated, world-scale capacity on time and on budget. Its story runs alongside the country’s construction boom, the collapse of the state-led model at Thái Nguyên, the arrival of Taiwan’s Formosa in Hà Tĩnh and the trade wars that now decide where Asian steel can be sold. This article explains how the company grew, why its costs are low, what the cycle does to it and where it is heading. It is part of the Vietnam Company Stories hub.

How did a machinery trader become a steelmaker?

Step by step, with each business funding the next. Trần Đình Long and Trần Tuấn Dương founded Hòa Phát in August 1992 to import used construction equipment, added furniture in 1995 and steel pipes in 1996, and only started making construction steel in 2000, when the trading businesses had generated enough cash to buy a rolling mill.

Long, born in 1961 in Hải Dương province and a graduate of the National Economics University in Hanoi, spent the 1990s learning the mechanics of Vietnamese industry from the supply side. Selling machinery to contractors showed him where margins sat; making pipes and furniture showed him how to run factories. When the company entered rebar, the domestic market was dominated by the state-owned VNSteel group and by joint ventures with Japanese and Korean partners, most of them rolling imported billet rather than making their own iron.

Hòa Phát listed on the Ho Chi Minh Stock Exchange in November 2007, at the height of Vietnam’s first stock-market boom, and used the capital to break with the industry model. Rather than roll imported billet, it would make its own iron from ore in blast furnaces, capturing the margin that rivals left to Chinese and Russian suppliers. The Hải Dương integrated complex in Kinh Môn, built in three phases from 2007 to 2016, took capacity to roughly 2.5 million tonnes and proved that a private Vietnamese company could operate blast furnaces profitably.

The decision was contrarian. Integrated steelmaking requires ore, coking coal, power and scale, all of which Vietnam lacked at the time, and most analysts assumed a private newcomer would be undercut by Chinese imports. Instead, Hòa Phát’s rebar took market share year after year, reaching about a fifth of the national market by 2016 and around a third by the early 2020s.

Why did the state’s flagship steel project fail while Hòa Phát’s succeeded?

Because TISCO’s phase 2 expansion in Thái Nguyên was managed as a political project with a Chinese contractor, cost overruns and no owner accountable for cash, while Hòa Phát built with its own money, chose sites for logistics and paid contractors on performance. The state project has consumed more than VND 8 trillion since 2007 and produced no steel.

Thái Nguyên Iron and Steel, the country’s first integrated mill, dates from the 1960s and was the symbol of state industry. Its phase 2 expansion, approved in 2005 and contracted to China Metallurgical Group in 2007, was meant to add half a million tonnes. Costs rose, disputes with the contractor stalled work in 2013, and the site has stood half-built ever since, with equipment rusting and interest accruing. Several executives were prosecuted, and the project became a standing example in Vietnamese debates about state investment.

Hòa Phát, over the same period, built Hải Dương and then moved to the coast. The Dung Quất complex in Quảng Ngãi, approved in 2017 and completed by 2021 at a cost on the order of VND 60 trillion, added around 4 to 5 million tonnes, including the company’s first hot-rolled coil. It sits on a deep-water port that can receive large ore carriers from Australia and Brazil, which cut logistics costs sharply against inland rivals dependent on trucks and barges.

The difference was not technology, which both projects bought from abroad, but ownership. Hòa Phát’s board had its own money at stake, and construction was run by an in-house team that had already built one integrated mill. This contrast between private execution and state ambition recurs across Vietnamese industry, and it is a theme of State Giants and Private Empires.

What makes Hòa Phát’s costs so low?

Integration, location and scale. The company makes iron from imported ore in large blast furnaces, converts it to steel and rolls it on the same site, generates much of its own electricity from process gases, receives raw materials at its own port and sells into a domestic market that grew faster than almost any in Asia. Each element shaves a few dollars a tonne; together they add up to a durable margin.

The blast-furnace route matters because Vietnam’s electricity is neither cheap nor reliable enough for large electric-arc furnaces, and scrap supply is limited. By importing ore and coking coal in bulk and using the resulting gases to power its own turbines, Hòa Phát has kept energy cost per tonne below rivals dependent on the grid, a consideration that grew in importance during the 2023 power shortages described in EVN.

Location is the second lever. Dung Quất sits on a deep-water port in central Vietnam, midway between the two big construction markets, with capesize vessels able to unload ore directly into the plant. Hải Dương serves the north by road and river. The company has also built its own fleet of bulk carriers and container operations to control freight, a step most Southeast Asian producers have not taken.

Scale is the third. With more than 30,000 employees and a product range from rebar and wire rod to hot-rolled coil, galvanised sheet, pipes and prestressed strand, Hòa Phát can run its furnaces at high utilisation across the cycle by shifting output between products. Smaller rivals cannot, and in downturns they cut volume while Hòa Phát cuts price, which is how its share has kept rising.

How does the steel cycle hit the company?

Hard and fast. Net profit reached a record of roughly VND 34.5 trillion in 2021 on revenue of about VND 150 trillion, when post-pandemic demand and high prices coincided, then fell to about VND 8.4 trillion in 2022 and under VND 7 trillion in 2023 as Chinese exports surged and domestic construction stalled, before recovering to around VND 12 trillion in 2024.

The 2022 to 2023 downturn combined several shocks. China’s property collapse pushed its mills to export at marginal cost, sending hot-rolled coil into Vietnam at prices below Hòa Phát’s cost. Domestic demand fell as developers such as Novaland stopped building, and the State Bank’s rate rises made inventory expensive to carry. The company idled furnaces at Hải Dương and Dung Quất in late 2022, cut its dividend and delayed parts of Dung Quất 2.

Recovery came from two directions. Public infrastructure spending on expressways and airports absorbed rebar, and the Ministry of Industry and Trade imposed anti-dumping duties on Chinese and Indian hot-rolled coil, provisional in early 2025 and confirmed in mid-2025 at rates in the range of roughly 20 to 28 percent. That protected the market that Dung Quất 2 was built to serve. Management guided for revenue of around VND 170 trillion and net profit of about VND 15 trillion in 2025.

Investors have learned to treat the stock as a leveraged play on Vietnamese construction and Chinese steel prices. Long, whose personal fortune has ranged between roughly $1 billion and $3 billion depending on the share price, has been open that the company plans through the cycle rather than around it, building capacity in downturns when equipment and contractors are cheap.

What is Dung Quất 2, and why does it change the company’s profile?

Dung Quất 2 is a VND 85 trillion, roughly $3.5 billion, expansion adding about 5.6 million tonnes of hot-rolled coil capacity, with its first phase producing from early 2025 and the second scheduled for late 2025 or 2026. It shifts Hòa Phát from a construction-steel company into a flat-steel supplier to manufacturers, exporters and, potentially, shipbuilders and carmakers.

Flat steel is a different business. Rebar is sold to contractors on price and delivery; hot-rolled coil is sold to galvanisers, pipe makers, appliance and vehicle plants, and increasingly exported, where it meets quality standards and trade barriers set abroad. Before Dung Quất 2, Vietnam’s only large domestic source of coil was Formosa Hà Tĩnh, the Taiwanese-owned complex that opened in 2016 after a pollution scandal that cost the company a $500 million settlement.

The expansion arrives into a protected but contested market. Anti-dumping duties keep Chinese coil out, but Vietnamese galvanisers who export to the United States and Europe face their own barriers: US Section 232 tariffs on steel were doubled to 50 percent in June 2025, and the European Union’s carbon border adjustment mechanism begins charging on imported steel from 2026. Hòa Phát’s blast-furnace route is carbon-intensive, which is a liability in Europe even as it is a cost advantage at home.

The upside is import substitution. Vietnam consumed on the order of 12 to 13 million tonnes of hot-rolled coil a year and imported most of it, largely from China, before 2025. If Dung Quất 2 captures even half that demand, the company’s revenue base roughly doubles. Whether it can also export into markets increasingly hostile to Asian steel is the open question, and it links to the wider trade story in The Tariff Shock.

Why is Hòa Phát building a rail-steel plant?

Because the North-South high-speed railway approved in November 2024 will need on the order of a million tonnes of specialised rails and structural steel, and Long committed in early 2025 to supply them from a new plant in Phú Yên rather than let the order go to China or Japan. It is the company’s most political investment and its first move into steel the country has never made.

The commitment was made publicly at a government meeting with major private companies in February 2025, where the Prime Minister asked business leaders what they could contribute to the railway. Long answered that Hòa Phát would produce rails to international standards and invest on the order of VND 14 trillion in a dedicated mill with capacity of roughly half a million tonnes a year, using European rolling equipment. The plant is planned at the Hòa Tâm site in Phú Yên, adjacent to a deep-water port. The railway itself, and the private bids to build it, are analysed in The $67 Billion Railway.

The business case is narrower than the headlines suggest. Rail steel is a niche product with demanding metallurgy and long qualification processes; the domestic order is large but finite, and export markets are dominated by established producers. Hòa Phát is betting that the railway, plus urban metro lines, plus the Lào Cai to Hải Phòng line being built with Chinese standards, will keep the mill busy for a decade, and that the government will prefer domestic supply in tendering.

It also fits a pattern. Vietnam’s leading private groups have each been asked to take on a strategic industrial task: Vingroup in cars, Thaco in mechanical engineering, Hòa Phát in steel for infrastructure. The reward is policy support and preferred access to state demand; the cost is capital tied up in projects whose economics depend on the state keeping its side of the bargain.

What does Hòa Phát teach founders and investors about heavy industry in emerging markets?

That vertical integration financed from retained earnings, built in phases and located for logistics can beat both state incumbents and foreign giants, provided demand at home is large and growing. It also shows that the price of that success is exposure to a single economy’s cycle and to trade policy set elsewhere.

For founders, the operational lesson is sequencing. Hòa Phát entered each new product only when the previous one generated the cash to fund it, kept construction in-house and never bet the company on a single phase. Dung Quất 1 was financed from Hải Dương’s profits and bank debt that was repaid within a few years; Dung Quất 2 was financed from Dung Quất 1. That discipline distinguishes it from developers that expanded on bonds.

For investors, the lesson is about cyclicality and governance together. The company is family-controlled, with Long and associates holding a substantial stake, but it has paid dividends, expanded when the shares were cheap and communicated plainly. That combination has made it one of the most widely held stocks by foreign funds in Vietnam, and its weight in the index means it moves with the market as much as with steel.

For operators elsewhere in Southeast Asia, the comparison with Indonesia’s Krakatau Steel, a state producer that has needed repeated rescues, or with Thailand’s reliance on imports, suggests the Hòa Phát model is replicable only where a large domestic market coincides with an owner willing to commit for two decades. Vietnam had both. The company’s next decade will test whether it can keep the advantage as demand shifts from rebar to flat steel and from home to export markets.

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