Steel firms in doldrums
Steel firms in doldrums
Several listed steel firms reported losses in the first quarter of this year.
Currently, there are 15 steel enterprises listed on the stock market. Most of them have seen lower profits or even suffered losses, while only four have seen rising profits, reported Vietstock.
Ton Hoa Sen Group (code HSG) saw weak profits in the first three months of 2014 with only VND68 billion ($3.23 million), less than one-third of its profits in comparison with the same preriod last year.
The company attributed the downtrend to difficulties in the steel market due to weak purchasing power, surplus supply, and fierce competition between domestic steel products and cheaper imported products from China. Additionally, the real estate market has yet to emerge from its long stasis.
Ho Chi Minh Stock Exchange (HoSE)-listed Pomina Steel Corporation (POM), which has 16 per cent market share, reported losses of VND5.6 billion ($266,666) in this year’s first quarter.
Nam Vang Joint Stock Company (code NVC) has reported losses since the fourth quarter of 2011 and by March 31 this year it showed accumulated losses of VND364 billion ($17.3 million).
The Tien Len Corporation (TLH), Vietnam-Italy Steel (VIS), the Nam Kim Group (NKG) and the Dana Y Steel Company (DNY) all also saw declining profits in this year’s first three months.
According to Phan Dung Khanh, investment consultancy director of Maybank Kim Eng Securities, high inventories and low sales are the major problems steel companies face.
“We think Vietnam’s steel sector outlook will remain cloudy in 2014 as recovery seems unlikely due to soaring inventory levels in China, the world’s largest steel producer. Therefore, we think Chinese steel-makers will increase their exports, which could further drag down global steel prices,” said Maybank analyst Nguyen Trung Hoa.
The Ministry of Industry and Trade said the country would see the supply of steel products rise 1.5-1.8 times above the domestic demand next year. Steel firms will have a total manufacturing capacity of 35.3 million tonnes per year within five years, while domestic demand looks to only be around 15 million tonnes.
This year the Vietnam Steel Corporation (VSA) has set the annual production target of nearly 1.5 million tonnes of billets and 2.6 million tonnes of rolled steel, representing year-on-year increases of 24.5 per cent and 8 per cent, respectively.
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