'Revealing' factors supporting the steel market in the last months of the year

Steel will continue its recovery phase.

Data from the Vietnam Steel Association (VSA) shows that total steel consumption of all types in the past 9 months increased by 14.5% over the same period in 2023. Also according to VSA, total construction steel consumption in the past 9 months increased by 12.5% ​​over the same period in 2023, of which domestic consumption reached over 7.1 million tons, up 11.1%.

It is necessary to strengthen coordination with associations and enterprises in the steel industry to take advantage of opportunities in the domestic market. Photo: Hoa Phat Steel

For example, since mid-September, brands have adjusted steel prices many times, in which Hoa Phat rebar increased by 460,000 VND per ton. Specifically, CB240 rolled steel and D10 CB300 rebar both increased by 100,000 VND to 13.58 and 13.79 million VND per ton, respectively. Rebar alone has increased its price for the third time in a row since mid-September with an amplitude of 460,000 VND per ton.

Other brands such as Viet Y, Viet Duc, Viet Sing, Kyoei Vietnam, VJS... also changed prices since the beginning of the month. Depending on the type, the price will increase by 100,000-170,000 VND after each adjustment, some types increased twice in a row just last week.

Thus, after recent price increases, construction steel is being sold at around 13.5-14 million VND per ton. This price level is returning to the same level as in late July and early August, before a sharp decline occurred throughout the following period.

Data from financial solutions platform FinSuccess shows that brands with large market shares in the industry have recorded a recovery in consumption. Hoa Phat's steel sales in the first 8 months reached more than 1.05 million tons, up over 40% over the same period last year. Of which, the domestic channel increased by nearly 22.5% and exports increased by nearly 54%.

Nam Kim Steel (NKG) had a consumption of more than 621,400 tons, an increase of more than 26%. Meanwhile, Ton Dong A (GDA) reached more than 588,300 tons, an increase of more than 16%.

Notably, steel exports are showing positive signs, with steel consumption expected to increase by 6.4% to nearly 21.6 million tons. In addition, finished and semi-finished steel exports will increase by 12% to nearly 13 million tons this year.

In the recently updated steel industry outlook report, Dragon Capital Securities (VDSC) expects that Vietnamese steel enterprises will continue to record positive growth in domestic sales volume in 2024, especially in the second half of the year. In particular, demand from infrastructure construction activities after the land acquisition and site clearance phase, key infrastructure projects such as the North-South Expressway, beltway, etc. will require construction steel consumption, thereby being a supporting factor for the domestic market in 2024. However, the real estate market will still contribute the highest proportion to the domestic sales volume of steel manufacturing companies.

Support for the steel industry in the remaining months of 2024

Normally, the market in the fourth quarter of each year will recover in both price and demand, but with the current unpredictable developments, market assessment will face many disadvantages, affecting the preparation of production management plans at steel enterprises.

Meanwhile, Chinese steel producers continue to increase exports, increasing pressure on the world steel market and the Southeast Asian region, including Vietnam, which means the price competition for finished steel products in the domestic market will become increasingly fierce.

On the other hand, the real estate and civil construction markets have not yet recovered clearly, causing the domestic steel market to face more difficulties and challenges than advantages in the last months of the year.

Mr. Nguyen Duc Dung - Deputy General Director of the Vietnam Commodity Exchange (MXV) commented that in the fourth quarter, the seasonal increase in demand in China along with positive signals from macro factors when major central banks in the world moved to lower interest rates, steel prices may experience upward adjustments again. The recovery of the steel industry this year mainly comes from comparison with the low base level of last year.

Regarding this issue, Mr. Pham Cong Thao, Deputy General Director of Vietnam Steel Corporation, said that according to the forecast of the World Steel Association, the demand for finished steel in 2024 will grow by 1.9% compared to 2023, of which the steel consumption demand of the European region will grow by 5.7% (this is also one of the largest steel export markets of Vietnam), and the ASEAN region will grow by 5.2%.

In Vietnam, according to the assessment of the Vietnam Steel Association, the steel industry is likely to recover weakly in 2024 due to the difficulties in the real estate market that still exist (the largest steel consuming sector in Vietnam). Steel consumption is forecast to increase by 7% to 21.7 million tons, output could reach nearly 29 million tons, up 7% compared to 2023.

In addition, to serve the development of industrialization and modernization, there needs to be policy orientations to initially master the technology of producing basic processed and manufactured steel, gradually promoting the development of special steel grades and high-quality alloys to serve the needs of the domestic mechanical, processing and manufacturing industry and towards export.

On the part of Vietnam Steel Corporation, it continues to seriously implement the Prime Minister's instructions in Directive No. 29/CT-TTg dated August 27, 2024 on stimulating consumption, supporting production, business and developing the domestic market through tasks and solutions focusing on innovation in governance, improving competitiveness, reducing costs, lowering prices, and improving product competitiveness.

The Corporation's leaders also directed member enterprises to coordinate to increase the use of raw materials and products of domestic manufacturing enterprises (especially raw materials and products that have been produced within the Corporation's system).

Along with that, build an effective production and business plan, improve product competitiveness, focus on maximizing the exploitation of the domestic market area, at the same time, units in the whole system continue to strengthen and promote coordination in the supply and consumption chain to maximize the system's strength, strive to best complete the production and business plan targets for 2024.

To support the steel industry to recover and develop, economic experts suggest that the Ministry of Industry and Trade should continue to research and appropriately apply trade defense measures to protect the domestic steel market. Along with that, it is necessary to strengthen coordination with associations and enterprises in the steel industry to take advantage of opportunities in the domestic market from the disbursement of public investment capital for large traffic and construction projects. From there, promote domestic production supply, create breakthrough growth, develop steel production, construction materials and mechanics...

Source: https://congthuong.vn/lo-dien-yeu-to-ho-tro-thi-truong-thep-trong-nhung-thang-cuoi-nam-352620.html