Steel producers await positive results in H2
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.
Construction steel prices in the international markets. Source: VSA |
A recent monthly report from Việt Nam Steel Association (VSA) showed that construction steel production decreased by 9.1 per cent month-on-month to 738,196 tonnes. Sales also fell by 6 per cent to 874,441 tonnes, of which sales to international markets declined by 21.5 per cent to 149,623 tonnes.
Construction steel manufacturing output for the first half of the year totalled nearly 5 million tonnes, a 25.5 per cent decrease from the same period last year, while sales and exports decreased by 22.7 per cent and 38 per cent 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.
Prices of Vietnamese construction steel and raw materials. Source: VSA |
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, Việt Nam'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 per cent to 4.38 million tonnes. Italy is the top importer of Vietnamese steel, with roughly 696,000 tonnes, up 121 per cent year-on-year.
Outside the EU, exports to Malaysia grew 23 per cent to 383,000 tonnes, while shipments to the US were 297,000 tonnes, a gain of 4 per cent.
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 per cent 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 VNĐ700 trillion (US$29.59 billion) was authorised by the National Assembly, an increase of roughly 25 per cent 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 Phạm Quang Anh, Director of the Vietnam Commodity News Centre under the Mercantile Exchange of Vietnam (MXV).
"Việt Nam is the leading country in Asia in terms of infrastructure investment to boost the economy, with spending accounting for about 5.7 per cent of GDP. Việt Nam 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, Lê Xuân, an independent trader, told Việt Nam 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 Thursday 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 Hoà Phát Group (HPG), up 2.92 per cent, while Hoa Sen Group (HSG) jumped 1.15 per cent and Nam Kim Group (NKG) rose 0.8 per cent. The stocks soared 56.7 per cent from the beginning of the year.
In the first quarter, the country’s leading steel producers - Hoà Phát, Hoa Sen, and Nam Kim - all reported profits after losses for the previous two quarters.
