Hoa Phat (HPG) Dung Quat Rail Plant Nears 70% Completion, First High-Speed Rail Steel Due Q1 2027

Overview

Hoa Phat Group (HOSE: HPG) said its Dung Quat rail and special steel plant has reached nearly 70% completion as of September 2026, with the first high-speed rail steel products expected in Q1 2027. The project carries more than VND 10,000 billion in investment and a 700,000 ton-per-year design capacity, and Hoa Phat has separately proposed a phase 2 expansion adding 2 million tons per year and VND 20,000 billion in capital.

Key Facts

• Dung Quat rail and special steel plant is nearly 70% complete as of September 2026, per Hoa Phat Group.
• Design capacity: 700,000 tons per year; total investment: more than VND 10,000 billion.
• Equipment technology supplied by Germany’s SMS group; peak installation, adjustment and trial runs begin October 2026 with SMS technical supervision.
• First high-speed rail steel product targeted for Q1 2027, specifically January 2027.
• Rail bars can reach 100 m in length, produced from low-impurity iron ore, with laser geometry control and ultrasonic internal defect testing.
• Proposed phase 2: an additional 76.93 ha, 2 million tons per year of capacity, added steel plate product lines, and VND 20,000 billion more investment.
• If fully implemented, total investment would reach roughly VND 30,000 billion and total capacity about 2.7 million tons per year.

What Happened

Hoa Phat Group disclosed the progress update, stating that as of September 2026 the Dung Quat rail and special steel project had completed close to 70% of its schedule, with work focused on finishing workshop structures and installing technology equipment. From October 2026, the site is scheduled to enter a peak phase of receiving, installing, calibrating and trial-running equipment under the technical supervision and coordination of specialists from SMS group of Germany. Hoa Phat is also working with SMS and the Faculty of Materials at Hanoi University of Science and Technology to train engineers and technical staff for technology transfer and stable plant operation, while Hoa Phat Dung Quat Rail and Special Steel Joint Stock Company is finalising its management appointments.

The plant’s high-technology product range covers high-speed railway rails, urban railway rails and crane rails, alongside U, I, H and V section steel and other special steels. Hoa Phat said the rails are made from low-impurity iron ore, can reach 100 m in length, and are checked with laser geometry equipment and ultrasonic internal defect testing, with production intended to meet several international standards. The company expects the first high-speed rail steel to leave the line in Q1 2027, timed for major national railway projects. Separately, Hoa Phat has asked to amend and expand the project in Dung Quat Economic Zone, with the phase 2 dossier now collecting opinions from central ministries and agencies.

Market Context

HPG closed at 21,150 on 22 September 2026 on the Ho Chi Minh Stock Exchange (HOSE). The stock sits within the steel sector, where domestic demand has been tied to construction and infrastructure cycles while regional steel prices and Chinese exports remain swing factors. The Dung Quat update shifts HPG’s narrative toward higher-value product mix rather than commodity construction steel alone, a theme the market has tracked since the project was first announced. The phase 2 proposal, if approved, would materially raise the scale of HPG’s special steel footprint relative to its existing long-product base.

Strategic Significance

For long-term investors, the rail plant is HPG’s route into a domestic market currently served largely by imports: high-speed and urban rail steel for Vietnam’s planned north-south express railway and metro programmes. Producing 100 m rails locally with SMS technology and international-standard certification would position HPG as a strategic supplier to state infrastructure, a demand pool less exposed to ordinary construction cycles. The proposed phase 2, adding steel plate and lifting capacity toward 2.7 million tons per year, signals HPG intends to build a special steel platform rather than a single-product line. Execution risk is concentrated in technology transfer, certification and the timing of national rail tenders, not in raw capacity.

What to Watch

• Formal approval of the phase 2 expansion by central ministries and the Dung Quat Economic Zone authority.
• Commissioning and trial-run milestones from October 2026 through the first Q1 2027 rail output.
• International standard certifications for the rail products, a prerequisite for state railway contracts.
• Progress and tender timelines for Vietnam’s high-speed and urban railway projects.
• HPG quarterly disclosures on Dung Quat capex, segment margins and any change to the VND 30,000 billion total investment estimate.