Steel products manufactured by Hoa Phat Group. Despite rising demand in May, steelmakers expect the struggle to continue. (Photo: VNA) A monthly report from the Vietnam Steel Association (VSA) showed that construction steel output increased by 14.18% over the previous month to 812,085 tonnes, but decreased by 27.3% year-on-year.
Sales of the products in May increased by 26.08% month-on-month to 927,618 tonnes but were unchanged compared to the same period last year.
Raw material prices tended to increase slightly at the end of May, with the rally extending to June. However, due to weak demand, steel producers had to gradually reduce their prices and implement subsidies.
In the domestic market, as of June 15, some steel manufacturers have lowered their prices by 100,000 VND to 270,000 VND per tonne for CB240 steel coils, down to about 13.94 million VND to 14.82 million VND per tonne. They kept the same price for the CB300 rebar as compared to the latest adjustment.
Data compiled by steelonline.vn showed that, during the period, Hoa Phat Group (HPG), the country's largest steel producer, quoted its CB240 steel coils in the northern market at 13.94-14.82 million VND per tonne, a decrease of 100,000 VND.
In the central and southern markets, the prices were at 14.04 million VND per tonne and 14.31 million VND per tonne, respectively, down 100,000 VND and 200,000 VND.
The company said that the falling costs of input materials and steel billets was the cause of the decline in steel prices.
In the first quarter, Hoa Phat achieved 26.6 trillion VND (1.13 billion USD) in sales, a decrease of nearly 40% over last year. Its consolidated profit after tax was more than 383.2 billion VND, completing 5% of the 2023's plan.
Despite the decline, the results were positive after losing up to 3.5 trillion VND in the last two quarters.
The company said that steel production and related products contributed 94% of profit after tax.
The selling prices have been impacted by negative sentiment and sluggish demand across global markets.
The real estate industry shows no signs of optimism as the number of public housing projects under construction is low and the banking system is tightening credit.
The sector has a huge influence on the demand for domestic steel, accounting for some 60-65% of the industry's demand.
Since the beginning of 2023, a number of policies supporting the real estate industry have been implemented, but the market needs more time to recover, according to VNDIRECT Securities.
In addition, given attempts to increase exports, Chinese steel businesses are accelerating their price reduction rates to compete, adding pressure on the downtrend of steel prices in the international markets.
The General Administration of Customs of China (GACC) reported that the nation's steel exports in May totalled 8.4 million tonnes, an increase of 7.6% year-on-year, the highest level since September 2016.
Overall, the first five months saw a high increase in steel exports, up 41% to 36.3 million tonnes from the same period last year.
VNDirect said that steel prices have cooled down recently, and the bearish trend is expected to continue through 2023 due to weak demand and lower input materials prices./.
VNA
