Steel producers await positive results in H2

While steel prices have continued to fall and demand remains low, the steel industry is expected to recover at the end of this year.
Steel producers await positive results in H2 ảnh 1Illustrative image (Photo: VNA)
Hanoi (VNS/VNA) - While steel prices have continued to fall and demand remains low, the steel industry is expected to recover at the end of this year.

A recent monthly report from the Vietnam Steel Association (VSA) showed that construction steel production decreased by 9.1% month-on-month to 738,196 tonnes. Sales also fell by 6% to 874,441 tonnes, of which sales to international markets declined by 21.5% to 149,623 tonnes.

Construction steel manufacturing output for the first half of the year totalled nearly 5 million tonnes, a 25.5% decrease from the same period last year, while sales and exports decreased by 22.7% and 38% over last year, respectively, to roughly 5.1 million tonnes and 831,000 tonnes.

VSA said that weak steel demand in most regions of the world and negative sentiment had both weighed on the selling prices of finished steel. Also pressuring steel prices, Chinese producers were boosting exports by lowering prices at a rapid rate to compete, the association added. 

Since the beginning of the year, construction steel prices have been revised down 12 to 13 consecutive times. Currently, CB240 steel is quoted at 13.74 - 14.48 million VND per tonne (580.85 - 612.13 USD), while prices of D10 CB300 are about 14.06 - 15.1 million VND per tonne.

According to the report, prices of raw materials were stable last month, but sluggish domestic demand drove manufacturers to decrease selling prices competitively. In addition, few social housing projects have been undertaken because the real estate market has not yet shown signs of recovery.

Bright picture ahead

While local demand is suffering, Vietnam's steel sales to the EU have increased significantly.

The General Department of Customs reported 1.13 million tonnes of iron and steel were shipped in May. In the first five months of the year, the accumulation of steel exports increased by 10.4% to 4.38 million tonnes. Italy is the top importer of Vietnamese steel, with roughly 696,000 tonnes, up 121% year-on-year. 

Outside the EU, exports to Malaysia grew 23% to 383,000 tonnes, while shipments to the US were 297,000 tonnes, a gain of 4%. 

The World Steel Association (WSA) forecast at the end of May that global steel consumption would begin to rise this year after declining 3.2% in 2022.

Moreover, recent business-friendly measures, such as rate cuts and public investments, were projected to assist steel manufacturers.

Lowering loan costs would enhance enterprises' profit before tax while promoting public investment and infrastructure would alleviate the output problem and encourage the growth of the local iron and steel sector.

In 2023, a public investment plan with a total capital of about 700 trillion VND (29.59 billion USD) was authorised by the National Assembly, an increase of roughly 25% over the 2022 plan. 

"With the Government's support, the steel manufacturing industry is expected to overcome difficulties in the last months of the year and reaffirm its position as a key industry in the development of the country's economy," said Pham Quang Anh, Director of the Vietnam Commodity News Centre under the Mercantile Exchange of Vietnam (MXV).

"Vietnam is the leading country in Asia in terms of infrastructure investment to boost the economy, with spending accounting for about 5.7% of GDP. Vietnam also aims to move towards becoming a high-income economy, and infrastructure development plays an important role in achieving that goal. 

"As a result, increased public investment in infrastructure projects will serve as a driving force in assisting the domestic iron and steel market to overcome challenges by the end of this year."

Given the importance of iron and steel in construction projects and highway works, the current price ranges would help reduce cost pressures on businesses, he added.

The difficulties were expected to ease in the second half, especially in the fourth quarter, as demand rises when construction projects would speed up, Le Xuan, an independent trader, told Vietnam News.

On the stock market, steel stocks would be able to continue to move positively in the near future thanks to the domestic steel market's recovery momentum, although this was not really clear.

The market ended July 20 on a negative note, weighed by losses in pillar stocks in the banking and real estate industries.

However, it was cushioned by gains of steel producers led by Hoa Phat Group (HPG), up 2.92%, while Hoa Sen Group (HSG) jumped 1.15% and Nam Kim Group (NKG) rose 0.8%. The stocks soared 56.7% from the beginning of the year. 

In the first quarter, the country’s leading steel producers - Hoa Phat, Hoa Sen, and Nam Kim - all reported profits after losses for the previous two quarters./.
VNA

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