Illustrative image (Photo: VNA) SSI Securities Corporation said the steel industry had a difficult 2022 withboth exports and domestic sales decreasing in the second half of the year, andprices falling from the end of the year.
Businesses’ profits went down significantly as a result.
Analysts at VNDirect Securities Company said most steel companies reporteddismal results.
With the property market remaining in a slump, prospects for 2023 remaingloomy, especially in the first half of the year, they said.
SSI Research said the stagnant real estate market and tightened monetary policywould drag down steel demand this year.
Citing data from the Ministry of Construction, it said the number of apartmentprojects licensed for construction in the first three quarters of 2022plummeted by 41% year-on-year, and delayed projects are likely to be furtherdelayed with developers facing liquidity problems.
It forecast domestic demand for finished steel products to decline in singledigit in 2023, with the acceleration in public spending possibly making upfor the reduced demand from households.
VNDirect estimated public spending to increase by 20-25% this year.
SSI Research said exports would recover slowly because of the global economicdownturn.
The World Steel Association said demand is expected to recover by 1% to 1.8billion tonnes in 2023 after falling by 2.3% in 2022.
Demand in the US and European markets is expected to decline this year as aresult of the economic downturn, but the Southeast Asian market is likely toremain steady.
Vietnam’s exports to traditional trading partners could beaffected by the capacity increases in recent years in neighbouring countriessuch as Malaysia, Indonesia and the Philippines, it warned.
So shipments of finished steel products could fall by more than 10% this year,it said.
But steel prices might be less volatile in 2023 due to steady demand in China.After falling by 2-4% in 2022, Chinese demand is expected to remain flat orrise by 1-2%, driven by the country’s reopening.
Major global manufacturers have cut their output after a long period of losses.
These factors could help regional steel prices remain steady though it isunlikely there will be strong rise since China’s reopening will also see anincrease in supply.
Current prices are 20-40% higher than before the COVID-19 pandemic.
Steady prices could help steel companies stabilise profits though the weakdemand would put pressure on revenues and profit margins and the price gapbetween Vietnam and other markets is narrowing.
SSI said profits would decline in the first half and gradually recover by theend of the year thanks to a possible demand recovery in both domestic andexport markets./.
VNA
