Illustrative image (Photo: VNA) A recent monthly report from the Vietnam Steel Association (VSA)showed that construction steel production decreased by 9.1% month-on-month to738,196 tonnes. Sales also fell by 6% to 874,441 tonnes, of which sales tointernational markets declined by 21.5% to 149,623 tonnes.
Construction steel manufacturing output for the first half of theyear totalled nearly 5 million tonnes, a 25.5% decrease from the same periodlast 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 mostregions of the world and negative sentiment had both weighed on the sellingprices of finished steel. Also pressuring steel prices, Chinese producers wereboosting exports by lowering prices at a rapid rate to compete, the associationadded.
Since the beginning of the year, construction steel prices havebeen revised down 12 to 13 consecutive times. Currently, CB240 steel is quotedat 13.74 - 14.48 million VND per tonne (580.85 - 612.13 USD), while prices ofD10 CB300 are about 14.06 - 15.1 million VND per tonne.
According to the report, prices of raw materials were stable lastmonth, but sluggish domestic demand drove manufacturers to decrease sellingprices competitively. In addition, few social housing projects have beenundertaken because the real estate market has not yet shown signs ofrecovery.
Bright picture ahead
While local demand is suffering, Vietnam's steel sales to the EUhave increased significantly.
The General Department of Customs reported 1.13 million tonnes ofiron and steel were shipped in May. In the first five months of the year, theaccumulation of steel exports increased by 10.4% to 4.38 million tonnes. Italyis 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 383,000tonnes, while shipments to the US were 297,000 tonnes, a gain of 4%.
The World Steel Association (WSA) forecast at the end of May thatglobal steel consumption would begin to rise this year after declining 3.2% in2022.
Moreover, recent business-friendly measures, such as rate cuts andpublic investments, were projected to assist steel manufacturers.
Lowering loan costs would enhance enterprises' profit beforetax while promoting public investment and infrastructure would alleviatethe 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 700trillion VND (29.59 billion USD) was authorised by the National Assembly, anincrease of roughly 25% over the 2022 plan.
"With the Government's support, the steel manufacturingindustry is expected to overcome difficulties in the last months of the yearand reaffirm its position as a key industry in the development of the country'seconomy," said Pham Quang Anh, Director of the Vietnam Commodity NewsCentre under the Mercantile Exchange of Vietnam (MXV).
"Vietnam is the leading country in Asia in terms ofinfrastructure investment to boost the economy, with spending accountingfor about 5.7% of GDP. Vietnam also aims to move towardsbecoming a high-income economy, and infrastructure development plays animportant role in achieving that goal.
"As a result, increased public investment in infrastructureprojects will serve as a driving force in assisting the domestic iron and steelmarket to overcome challenges by the end of this year."
Given the importance of iron and steel in constructionprojects and highway works, the current price ranges would help reduce costpressures on businesses, he added.
The difficulties were expected to ease in the second half,especially in the fourth quarter, as demand rises when constructionprojects would speed up, Le Xuan, an independent trader, told Vietnam News.
On the stock market, steel stocks would be able to continueto move positively in the near future thanks to the domestic steel market'srecovery momentum, although this was not really clear.
The market ended July 20 on a negative note, weighed by losses inpillar stocks in the banking and real estate industries.
However, it was cushioned by gains of steel producers led by HoaPhat Group (HPG), up 2.92%, while Hoa Sen Group (HSG) jumped 1.15% and Nam KimGroup (NKG) rose 0.8%. The stocks soared 56.7% from the beginning ofthe year.
In the first quarter, the country’s leading steel producers - HoaPhat, Hoa Sen, and Nam Kim - all reported profits after losses forthe previous two quarters./.
VNA
