| Impact of CBAM: Steel sector likely to see 4% drop in export valueSteel industry demand and prices recover, optimistic growth forecast in 2024 |
According to the General Statistics Office, in the first two months of 2024, iron and steel exports reached 1.5 billion USD. This result is considered positive because iron and steel exports of all kinds in February 2024 decreased sharply, even at the lowest level in the past 3 months, estimated at 950 thousand tons, with a value of 678 million USD, down 18.1% in volume and 17.6% in value compared to the previous month but up 19.3% in volume and 12.6% in value compared to the same period in 2023.
The average export steel price in February 2024 reached 713 USD/ton, up 0.6% over the previous month, but down 5.6% over the same period in 2023. In the first two months of 2024, the average export price reached 711 USD/ton, down 1.7% over the same period in 2023.
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On the other hand, imports of iron and steel of all kinds in February 2024 are estimated at 1.2 million tons, worth 892 million USD, down 19.4% in volume and 15.8% in value compared to the previous month; up 43.1% in volume and 32.4% in value compared to the same period in 2023.
2023 was quite a year of ups and downs for the steel industry when demand dropped sharply, causing many difficulties in production and export. The recovery from the last quarter of last year created momentum for the industry this year.
According to a recent forecast by the Vietnam Steel Association, steel consumption in the domestic market this year is expected to increase by 6.4% compared to 2023, reaching 21.6 million tons. Of which, the growth in construction steel consumption could reach up to 8%.
Construction steel is expected to become a bright spot for the steel industry's recovery in the context that two industries that account for a large proportion of the usage structure, civil construction (accounting for 66% of construction steel demand) and public investment (accounting for 14%), are recording positive recovery signals since the end of 2023. Consumption output in the last two months of the year increased by 30% compared to the average of previous months.
MBS Research commented that domestic steel prices bottomed out in the third quarter of 2023 and gradually recovered from the end of 2023. This year, construction steel prices are forecast to increase by 6%, reaching an average of VND15 million/ton.
Notably, the price difference between Vietnamese steel and Chinese steel is now only 30 USD/ton, lower than the average of 50 USD/ton in the past 2 years. This will help steel products in Vietnam not be under price competition pressure from Chinese steel.
In the medium term, when the real estate market enters a recovery cycle in 2025, construction steel prices are expected to continue to increase by 8%, reaching an average of VND16.4 million/ton.
Meanwhile, prices of key input materials for the steel industry such as iron ore and coking coal are expected to “cool down” from the beginning of the second quarter of 2024 after soaring in the last months of 2023. Currently, major financial institutions forecast that the global supply of iron ore and coking coal will remain stable in the coming time. Thereby, creating favorable conditions for steel enterprises to improve gross profit margins after a difficult period of 2022 - 2023.
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