Messer is set to build the largest industrial gases production facility in Vietnam after signing a new supply deal with the country’s largest steel producer, Hoa Phat Steel.
Under the contract, Messer will construct two plants in the Dung Quat economic zone in southern-central Vietnam to supply oxygen (O2), nitrogen (N2) and argon (Ar) to the steelworks by pipeline.
The sites will produce 80,000 Nm3 of O2 and 160,000 Nm3 of N2 per hour, which corresponds to around five and ten road tanker loads respectively. Aside from supplying the steelworks, Messer will also provide liquid gases to the local market, such as the shipbuilding industry and automotive suppliers.
The German industrial gases specialist generated sales of over €40m ($43m) in Vietnam last year, with owner and CEO Stefan Messer reinforcing, “By cultivating our partnerships and further increasing our supply of the local market, we’ve managed to generate impressively strong growth in Vietnam over the past year.”
gasworld spoke with Managing Director of Messer in Vietnam, Marc Wachter, about the new deal, the business history of the partners and the intricacies of the Vietnamese market.
How do you feel about the new deal?
Obviously this contract is a big success for Messer as it will give us the opportunity to build the biggest plant for industrial gases in Vietnam and strengthen our position and supply capacity in the Vietnamese market. But this deal is also a confirmation for the work done by our local teams in the last years, as our long-term and very successful partner, Hoa Phat Steel continues to put his trust in our company for his future expansion.
How long did the deal take to go through?
Retrospectively considered, we can say the deal went through very fast. It had to be like that, as the customer expected very short delays. But this was only possible because we could involve and use the experience of the different departments of the whole Messer Group and combine it with the deep knowledge of the local Messer teams concerning the customer’s expectations and the local market.
The construction is expected to start in the 2nd Quarter of 2017 and will begin operations in November 2018.
Were there any obstacles in the process?
There were no real obstacles during the process as both parties were able to mobilise when needed the required human resources – up to the Top Management – and also acquired a good understanding of the other company’s expectations over the past years and the former deals.
How does the market in Vietnam differ to other markets?
Every market has some elements that makes it unique. Vietnam is a fast growing market, attracting more and more high technology Investors and with a very young population whose consumption habits are changing. As a result, the demand for industrial gases increased strongly in the past years but also shifted from a simple single molecule supply to higher purity requirements, more complex mixtures and stronger service expectations. This is a change we could observe in many countries on their path to a higher development stage, but the particularity of Vietnam to be pointed out, is the velocity – meaning the very high speed of this daily change.
Also, another singularity of the local Vietnamese industrial gases market is due to the geographical extension of the country. The development of our market mainly happened around the two main economic zones in the North and in the South, while there is now a third one arising in the centre of Vietnam. Due to the distance between those zones, you could say that there are three different markets inside of the same country for most of the products we sell – Messer’s strength is to be present in all of these markets.
What opportunities do you see in Vietnam compared to the rest of Asia?
We are convinced that there are still opportunities in most of the South East Asian countries. We have not singled out Vietnam in particular, but our presence in the other South East Asian countries is still younger than in Vietnam, where we are celebrating our 20th year of presence. During that time, we could build up the teams knowledge and production capacities to be able to follow the fast change and growth of our customers. But the same way we did it now with the new Hoa Phat deal, we are also committed to invest further when there are solid new projects and opportunities arising not only in Vietnam but also in the other South East Asian countries. And there will be more opportunities, as the further regional economic integration will create them.
Anymore future deals in place?
We are always observing the market and looking for new opportunities inside of the plan we have for our future development in Vietnam and South East Asia in general.
Messer’s 2016 annual report is expected to be published in the middle of June.