Data from SSI Research showed that the demand for finished steel in Vietnam declined by 6% in the first 5 months of 2022 compared to the same period in 2021. Possible reasons include:
In terms of exports, although they remained stable in the second quarter, exports of Vietnam’s steel industry may decelerate in the coming quarters. Currently, the export volume of finished steel has a growth rate of 13% in the first 5 months of 2022.
However, the export channel has tended to slow down in recent months, especially in the galvanized sheet segment, with monthly output about 30% lower than the peak in the fourth quarter of 2021.
According to SSI Research, this drop in output is due to falling demand in key export markets (especially the US and EU), which once accounted for 60-70% of the total in favorable conditions. export volume of galvanized steel sheet of Vietnam.
In addition, exports in the year’s second half may also be negatively affected by protectionist measures imposed by the EU.
“The EU recently added Vietnam to the group of "other countries" with an import quota for this group of 2.1 million tons of hot-dip galvanized steel (HDG) from July 1, 2021, to June 30, 2022, and increase by 4%/year in the next 2 years. With this adjustment, exports from Vietnam to the EU may decrease in the coming time," said an expert of SSI Research.
Vietnam's steel industry depends on foreign imported raw materials such as iron ore, scrap steel, coking coal, graphite electrode, etc., so when the price of input materials fluctuates, the price of finished steel will increase. must adjust to the world market. As of June 1, the price of square billet at Ease Asia port fluctuated at 650 USD/ton CFR, down nearly 100 USD/ton from the end of April.
Similarly, scrap steel prices decreased by 75 USD/ton, to 495 USD/ton. Along with the price of raw materials, the crisis of oversupply in the Chinese steel market also exerted force, pulling Vietnam's construction steel price down.
In 2022, Vietnam has to import many types of materials for steel production. Vietnam imported more than 18 million tons of iron ore for blast furnaces, about 6 - 6.5 million tons of scrap steel for electric furnaces, about 6.5 million tons of coking coal, and about 10,000 tons of graphite electrodes. The price of iron ore, scrap steel, raw material ores, coking coal, etc., will remain high, which will directly affect steel producers and the domestic steel market.
Talking about the prospect of the steel industry from now until the end of the year, the Chairman of the Board of Directors of Hoa Phat Group, Tran Dinh Long, said that in 2022, the operation of the steel industry will face many difficulties. Events such as the Russia-Ukraine conflict are disrupting the growth circuit of the steel industry, upsetting business plans and profit targets of enterprises. “From now until the end of the year, steel prices may continue to fall. That's why I'm cautious in my business plan in 2022," said Mr. Tran Dinh Long.
At the seminar on removing difficulties for the steel industry to maintain sustainable development, Chairman of the Vietnam Steel Association Nghiem Xuan Da said that 2022 is a year with many difficulties and challenges for Vietnamese steel enterprises. Currently, the price of input materials for steel production (coal, oil, gas, etc.) has increased, while the selling price of products has continuously decreased, leading to slow consumption and large inventories.
Meanwhile, factors such as banks strongly tightened credit for real estate loans, slow disburse of public investment capital, etc., also negatively impacted Vietnam's steel industry over the past time.
“I hope that, with the experience accumulated when dealing with the "shocks" of the market, Vietnam's steel enterprises will find solutions, especially creative solutions to overcome them. difficulties, stabilize production and business, and maintain efficiency," said Mr. Nghiem Xuan Da.
Compiled by VietnamCredit
