Steel Market Shows Signs of Recovery
The demand for construction, from residential to public investment, is bringing a revival to the steel industry. Sales at dealers have improved compared to a few months ago.
Improved Sales
Reporters from Kinh tế & Đô thị observed that several streets in Hanoi known for selling construction materials, such as Hoang Quoc Viet, Kim Nguu, Le Trong Tan (Ha Dong district), and De La Thanh, are busy with activity. The dealers are busy restocking their inventories.
Mr. Binh, who owns a steel dealership on Le Trong Tan street (Ha Dong district), said that from March to May every year is the peak construction season. The demand for steel rises, and his store replenishes its stock every 1-2 days.
"My dealership still imports steel from domestic brands. Although the demand for residential construction has increased, the recent price hikes in mid-April and early May mean we only stock enough to meet demand," Mr. Binh explained.
Market surveys show that as of May 2nd, some domestic steel companies like Hoa Phat, Viet Y, Viet Duc, Pomina, and VAS increased their prices by about 100,000 VND/ton for CB240 steel coil products. This marks the second consecutive price increase in the past two months.
Specifically, Hoa Phat increased the price by 100,000 VND/ton for CB240 steel coils in all three regions, to 14.24 million VND/ton. Meanwhile, the price of D10 CB300 rebar remained unchanged from the previous adjustment at 14.40 million VND/ton.
Similarly, Viet Y steel increased by 100,000 VND/ton for CB240 steel coils to 14.14 million VND/ton, while D10 CB300 rebar remained at 14.34 million VND/ton. Viet Duc steel also adjusted its price up by 100,000 VND/ton to 14.14 million VND/ton.
According to a representative of the Vietnam Steel Corporation (Vnsteel), the domestic construction steel market has started to heat up as some factories announced they would cut price support for CB4 and CB5 rebar by 50,000 - 100,000 VND/ton. Some manufacturers cut support by 150,000 - 200,000 VND/ton for civilian products, or increased the listed price of D10-Gr40 rebar by 50,000 VND/ton.
Although the input materials, such as steel billets and scrap steel, have seen price increases since early April 2024, manufacturers remain cautious about adjusting domestic construction steel prices.
The price increase of construction steel by manufacturers in late April was sporadic, with different methods of price adjustments. However, these are seen as initial signs of potential widespread price increases in the future.
"Overall, expectations for recovery in both price and demand in the domestic construction steel market are rising. Some building material traders in the North report improved average sales for residential customers in April compared to the previous month," a Vnsteel representative stated.
Opportunities and Challenges
Industry experts predict that Vietnam's steel demand will recover in 2024 compared to last year, but the growth will be weak and may not return to pre-COVID-19 levels.
The demand for construction steel depends on the recovery of the real estate market, which will become more apparent from late 2024 onwards when related legal regulations take effect.
Additionally, at the end of 2023, the National Assembly set a GDP growth target for Vietnam in 2024 of about 6 - 6.5%, higher than the entire year of 2023. Along with a minimum disbursement of 95% of public investment, this will positively impact the domestic economy and the real estate market. This, in turn, will boost the accompanying ecosystem, including construction and materials.
However, alongside these opportunities, the market continues to face challenges and difficulties. According to Vnsteel representatives, conflicts worldwide continue to escalate, disrupting global supply chains.
Global container freight rates have reached their highest levels since June 2011. This not only increases costs but also extends the transport time of imported and exported goods, including steel raw materials, along the Asia-Europe route by an additional 10 days.
The wave of bankruptcies in China's real estate market significantly impacts steel demand in the country. With domestic demand stagnating, China will increase exports, significantly affecting the regional steel market, including Vietnam.
The domestic steel market faces fierce competition from cheap imported steel from China. According to customs statistics, in the first two months of 2024, Vietnam imported over 1.8 million tons of steel products from China, more than three times the amount imported in the same period in 2023.
Building materials expert Pham Ngoc Trung predicts that rising electricity prices will pressure steel brands using electric furnaces, affecting production costs (with costs accounting for 7 - 8% of steel production).
Furthermore, when electricity prices increase, other input costs also rise. This significantly impacts production costs for businesses. "Additionally, steel manufacturers are concerned about the trend of increasing steel imports from China.
While Vietnam is striving to align with Net-Zero and the Carbon Border Adjustment Mechanism (CBAM) by adopting emission reduction technologies in steel production. If the government does not make adjustments, the Vietnamese steel industry will struggle to compete with Chinese steel prices," Mr. Pham Ngoc Trung noted.
According to the Vietnam Steel Association, the consumption of construction steel by manufacturers in the domestic market in Q1/2024 was 2.058 million tons, down 6.6% compared to the same period in 2023. In the North, consumption was 1.123 million tons, down 8.1%; in the South, 0.711 million tons, down 5.2%; and in the Central region, 0.223 million tons, down 3.7%.
Introduction to Nam Kim Steel
Nam Kim Steel, also known as Ton Nam Kim, is a leading producer of galvanized steel in Vietnam. They provide high-quality steel products for various industries, ensuring durability and reliability. Their galvanized steel is widely used in construction and manufacturing, known for its excellent corrosion resistance and long-lasting performance. Nam Kim Steel continues to innovate and meet the demands of both domestic and international markets. For more information about our products and services, please contact us directly:
TEL/WHATSAPP: +84 965047865
EMAIL: trietlm@namkimgroup.vn
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