Vietnam's HRC Exports Drop by Over 65% in May
[tintuc]
In May, Vietnam's hot-rolled coil (HRC) exports fell sharply, dropping more than 65% compared to the same period last year, down to 134,211 tons. This figure is roughly one-third of what it was in May 2023.
According to the Vietnam Steel Association, sales of HRC in May reached 521,767 tons, which is a 19% decrease year-over-year. This marks the third consecutive month of declining HRC sales. Last year's base level was already low due to a weakened market.
Export and Price Details
HRC exports continued to plummet by over 65% compared to the previous year, landing at 134,211 tons, equivalent to about one-third of the volume from May 2023. The average HRC price in May decreased by 6% year-over-year, to $551 per ton.
In May, HRC production reached 577,973 tons, leading to an increase in HRC inventory by 56,206 tons.
Industry Context
HRC is a crucial industrial steel product used as raw material in high-tech industries like automotive production, shipbuilding, mechanical engineering, household appliances, steel structures, galvanized steel, steel pipes, and container manufacturing.
Currently, Vietnam has two companies producing hot-rolled steel coils: Hòa Phát and Formosa. Formosa's design capacity is around 5 million tons per year, while Hòa Phát's capacity is about 3 million tons. Thus, the maximum current production is about 8 million tons of HRC, while domestic demand is about 11 million tons. The shortfall must be imported, predominantly from China.
Market Challenges
The consumption of HRC has dropped significantly in recent months due to weakening domestic and export market demand, as the real estate sector has not recovered and many economies are not showing signs of improvement. Additionally, the pressure from imported Chinese steel into Vietnam remains high. According to the General Department of Customs, steel imports from China more than doubled year-over-year in May, reaching 1.1 million tons, a record high for monthly imports. This market accounted for over 70% of Vietnam's steel imports in May.
The average price of imported steel in May was $638 per ton, down 19% year-over-year. This price is over $100 per ton lower than the average price of Chinese steel exports to all other markets.
In the first five months of the year, Vietnam imported more than 4.7 million tons of steel from China, up 91% from the same period in 2023. According to Chinese customs data, 70% of the steel exported to Vietnam in the first five months of the year was HRC.
Industry Outlook
At a mid-June conference on addressing challenges in the construction materials industry, Mr. Nghiêm Xuân Đa, Chairman of the Vietnam Steel Association (VSA) and CEO of VNSteel, predicted that steel production in 2024 could reach 30 million tons, a 7% increase over 2023. However, this recovery is uncertain, and steel companies still face significant challenges from Chinese steel and the supply-demand imbalance.
Mr. Đa highlighted that "overcapacity" of various domestic steel products and increasing steel imports will intensify price competition for finished steel products. Global market instability and rising international freight costs also pose risks for steel companies.
At the 2024 annual general meeting, Hòa Phát Group's leaders noted that the global and Vietnamese steel industries, including Hòa Phát, would continue to face significant challenges in 2024. These include China's slow economic recovery and ongoing geopolitical tensions affecting global economic stability.
Future Strategies
To mitigate these challenges, Hòa Phát is seeking new export markets for its HRC, especially as phase 1 of the Dung Quất 2 project is set to become operational by the end of this year or early next year. Once operational, this project will add 5.6 million tons of HRC to their production capacity, bringing their total HRC production capacity to 8.6 million tons.
Currently, Hòa Phát primarily exports to Europe and partly to Mexico. Despite Europe's economic recovery, demand remains, and the company continues to export to this market. They are also exploring potential exports to the United States.
In May, Vietnam's hot-rolled coil (HRC) exports fell sharply, dropping more than 65% compared to the same period last year, down to 134,211 tons. This figure is roughly one-third of what it was in May 2023.
According to the Vietnam Steel Association, sales of HRC in May reached 521,767 tons, which is a 19% decrease year-over-year. This marks the third consecutive month of declining HRC sales. Last year's base level was already low due to a weakened market.
Export and Price Details
HRC exports continued to plummet by over 65% compared to the previous year, landing at 134,211 tons, equivalent to about one-third of the volume from May 2023. The average HRC price in May decreased by 6% year-over-year, to $551 per ton.
In May, HRC production reached 577,973 tons, leading to an increase in HRC inventory by 56,206 tons.
Industry Context
HRC is a crucial industrial steel product used as raw material in high-tech industries like automotive production, shipbuilding, mechanical engineering, household appliances, steel structures, galvanized steel, steel pipes, and container manufacturing.
Currently, Vietnam has two companies producing hot-rolled steel coils: Hòa Phát and Formosa. Formosa's design capacity is around 5 million tons per year, while Hòa Phát's capacity is about 3 million tons. Thus, the maximum current production is about 8 million tons of HRC, while domestic demand is about 11 million tons. The shortfall must be imported, predominantly from China.
Market Challenges
The consumption of HRC has dropped significantly in recent months due to weakening domestic and export market demand, as the real estate sector has not recovered and many economies are not showing signs of improvement. Additionally, the pressure from imported Chinese steel into Vietnam remains high. According to the General Department of Customs, steel imports from China more than doubled year-over-year in May, reaching 1.1 million tons, a record high for monthly imports. This market accounted for over 70% of Vietnam's steel imports in May.
The average price of imported steel in May was $638 per ton, down 19% year-over-year. This price is over $100 per ton lower than the average price of Chinese steel exports to all other markets.
In the first five months of the year, Vietnam imported more than 4.7 million tons of steel from China, up 91% from the same period in 2023. According to Chinese customs data, 70% of the steel exported to Vietnam in the first five months of the year was HRC.
Industry Outlook
At a mid-June conference on addressing challenges in the construction materials industry, Mr. Nghiêm Xuân Đa, Chairman of the Vietnam Steel Association (VSA) and CEO of VNSteel, predicted that steel production in 2024 could reach 30 million tons, a 7% increase over 2023. However, this recovery is uncertain, and steel companies still face significant challenges from Chinese steel and the supply-demand imbalance.
Mr. Đa highlighted that "overcapacity" of various domestic steel products and increasing steel imports will intensify price competition for finished steel products. Global market instability and rising international freight costs also pose risks for steel companies.
At the 2024 annual general meeting, Hòa Phát Group's leaders noted that the global and Vietnamese steel industries, including Hòa Phát, would continue to face significant challenges in 2024. These include China's slow economic recovery and ongoing geopolitical tensions affecting global economic stability.
Future Strategies
To mitigate these challenges, Hòa Phát is seeking new export markets for its HRC, especially as phase 1 of the Dung Quất 2 project is set to become operational by the end of this year or early next year. Once operational, this project will add 5.6 million tons of HRC to their production capacity, bringing their total HRC production capacity to 8.6 million tons.
Currently, Hòa Phát primarily exports to Europe and partly to Mexico. Despite Europe's economic recovery, demand remains, and the company continues to export to this market. They are also exploring potential exports to the United States.
[/tintuc]
