Vietnam's Steel Industry on the Path to Recovery
[tintuc]
The steel industry is showing signs of positive recovery, particularly in the domestic market. After a slight decline of 2.4% in the first quarter compared to the same period last year, the consumption of construction steel has rebounded.
Positive Indicators
According to data from the Vietnam Steel Association (VSA), the total industry consumption in April reached 2.6 million tons, an increase of 31.5% year-on-year, driven by demand from residential construction and major public investment projects. Construction steel sales surged 62% to 1.19 million tons, and galvanized sheet sales reached 538.5 thousand tons, up 52%. Export channels also showed promise. Preliminary data from the General Department of Customs indicated that Vietnam exported over 1.1 million tons of steel in April 2024, earning $835.14 million, up 0.9% in volume and 0.04% in value. Steel exports for the first four months of the year exceeded $3.2 billion with 4.34 million tons, an increase of 28% in value and 33.7% in volume compared to the previous year.
Specifically, Hoa Phat Group's sales of construction steel increased by 48% compared to the monthly average of Q1 2024, reaching 471,000 tons. Domestic sales of galvanized steel by companies such as Hoa Sen Group, Nam Kim Steel, and Ton Dong A showed positive recovery, with increases of 57%, 9%, and 75%, respectively, compared to the monthly average of Q1 2024.
Market observations in April also noted an unusual trend where dealers increased off-season inventory accumulation. Typically, inventory accumulation occurs from December to March, with April marking the start of the consumption period. This off-season stocking partly reflects improving end demand and low dealer inventory levels.
Additionally, the increase in domestic steel purchasing power is evident in the narrower price reduction of Vietnamese steel compared to the volatility in Chinese steel prices. Vietnam's steel industry relies heavily on imported raw materials, causing domestic steel prices to fluctuate similarly or more significantly than global prices, especially those from China. However, from February to April 2024, according to BSC Securities data, the domestic construction steel price in Vietnam only decreased by 2%, much lower than the 10-15% decrease in China's construction steel prices. Moreover, recent price reductions were relatively minor, with drops ranging from 100-200 VND/kg per instance.
Encouraging Steel Producers to Reduce Emissions
In a recent sector outlook report, Rong Viet Securities (VDSC) anticipates that Vietnamese steel companies will continue to see positive growth in domestic sales in 2024, especially in the latter half of the year. Demand from infrastructure construction following land clearance and key infrastructure projects like the North-South Expressway and ring roads will support the domestic market this year. The real estate sector will continue to contribute the highest proportion of domestic steel sales.
Agribank Securities also predicts that Q2 business results for the steel industry will maintain high growth compared to the low base of the same period last year, with Q2 steel sales volume expected to recover, estimated to increase by 15% year-on-year, reaching nearly 10.5 million tons based on positive Q1 sales and strong April consumption growth.
However, the Vietnam Steel Association notes that while the steel industry is poised for recovery, it may not be fully clear-cut in 2024 due to ongoing challenges in the real estate market. Steel consumption is forecast to increase by 7% to 21.7 million tons, with production potentially reaching nearly 29 million tons, a 7% increase from 2023.
The steel industry suggests that the government should provide financial support to encourage steel producers to upgrade production techniques to reduce energy consumption and carbon emissions, while gradually eliminating inefficient and outdated production capacity. Additionally, to support industrialization and modernization, there needs to be policy guidance to master the technology of producing basic processing steels, gradually promoting the development of high-quality special and alloy steels to meet domestic mechanical and manufacturing needs and aim for export.
To support the steel industry, economic experts propose that the Ministry of Industry and Trade continue to study and appropriately apply trade defense measures to protect the domestic steel market. Furthermore, enhancing coordination with industry associations and steel enterprises to capitalize on opportunities in the domestic market from public investment disbursement for large transportation and construction projects is essential.
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
[/tintuc]
