Key export markets - triple digit growth
The General Statistics Office reported that in the first two months of this year, iron and steel exports reached 1.5 billion USD. Although in February alone, iron and steel exports fell to the lowest level in the past three months, estimated at 950 thousand tons, worth 678 million USD, down 18.1% in volume and 17.6% in value compared to the previous month. However, compared to the same period last year, exports of this item increased by 19.3% in volume and 12.6% in value.
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| Positive signals about steel exports in the first months of the year have opened up a promising picture for the steel industry in 2024. |
Besides, statistics show that the average export steel price in February reached 713 USD/ton, up 0.6% compared to the previous month.
According to the General Department of Customs, Vietnam's total steel export volume from the beginning of the year to mid-February reached 1.54 million tons, with a turnover of nearly 1.1 billion USD. Thus, compared to the same period in 2023, the volume of exported steel increased by 65%, while the turnover increased by 66.2%.
It is known that ASEAN is the largest steel export market of Vietnam, accounting for 32% of the export market share. Next are the EU and the US, ranking 2nd and 3rd, accounting for 28% and 9% respectively.
Notably, in the first month of 2024, iron and steel exports grew impressively by triple digits from a number of markets such as Italy, the United States and Malaysia. Specifically, by the end of January 2024, exports to Italy reached 203 thousand tons, up 114% over the same period last year; the United States reached 139 thousand tons, up 419%; Malaysia reached 120 thousand tons, up 625%.
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 2 months of 2024, the average export price reached 711 USD/ton, down 1.7% over the same period in 2023.
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.
2024, many breakthrough opportunities
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.
The Vietnam Steel Association (VSA) also stated that the steel industry has many opportunities to make a breakthrough in 2024 thanks to favorable factors and opportunities from export markets. In 2030, the average steel consumption will reach 290-300 kg/person, a sharp increase compared to the current level of 240 kg/person. This is also the premise for a new development and growth cycle of the Vietnamese steel industry in the coming time.
According to VSA, the steel industry will also face a number of risks related to policies of China, the EU or challenges in green transformation, emission reduction, trade defense policies, etc. The steel industry is an industry that consumes a lot of energy, so businesses need to do more to comply with new regulations under the Law on Environmental Protection. Steel businesses also hope to have more support from the State, and at the same time, explain more about technical concepts to businesses.
Furthermore, currently, in response to regulations on greenhouse gas emission control, many leading corporations in the world such as Nike, Adidas, Coca-Cola, Heineken, etc. have also set out important environmental criteria for selecting suppliers. This requires Vietnamese enterprises wishing to participate in the chain of global brands to meet regulations on carbon emission reduction.
Regarding this issue, according to the Ministry of Industry and Trade, steel enterprises need to strengthen their research and closely monitor the development of export market demand in order to have timely and proactive preparation plans. In the long term, enterprises need to actively change technology, focus on green transformation, green production to reduce carbon emissions and be more transparent in governance, accounting systems according to international standards to minimize the risk of being investigated by countries and applying trade defense measures.
It is expected that in 2024, steel consumption will increase by about 6.4%, export output will increase to nearly 13 million tons. World steel demand is forecast to recover strongly in 2024, increasing by 1.9%, reaching 1.8 billion tons in 2024, so Vietnam's steel production will have many opportunities, expected to increase by about 10% in 2024. Finished steel production in 2024 and 2025 is estimated to reach about 28 million - 30 million tons, domestic steel consumption demand is about 22 million - 23 million tons.
In addition, 2024 is considered an important pivotal year for the steel industry, with the expectation that steel prices will continue to recover in the coming time. Moreover, the Land Law (amended), the Real Estate Business Law (amended) ... recently passed have contributed to removing legal obstacles for the real estate market, especially obstacles in the process of land valuation, compensation and site clearance. Thereby, helping investors speed up project implementation progress, bringing supply to the market.
Key projects such as the North-South Expressway and Long Thanh Airport are expected to be completed ahead of schedule in the 2025-2028 period. Growth in the infrastructure construction sector, which accounts for 14% of total steel demand, is expected to contribute positively to the recovery of the steel industry.
The World Steel Association (Worldsteel) pointed out that global steel demand reached 1.81 billion tons in 2023 and will increase by 1.9% to 1.85 billion tons in 2024. Of which, ASEAN's steel demand is expected to increase by 5.2%.
To achieve the goal of zero net carbon emissions by 2050, the steel industry needs to develop specific tasks and roadmaps for reducing emissions in the steel industry. To make green steel is certainly a long way ahead, requiring large resources in terms of both human resources as well as technology and finance. But in the immediate future, steel enterprises need to be proactive in information and policies, thereby adjusting and standardizing energy management and gradually reducing emissions in production. This is something that enterprises can do immediately, completely at no cost. |
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