According to the data of the Vietnam Steel Association (VSA), the production of finished steel of all kinds reached more than 4.7 million tons, increasing by 30.3% over the same period in 2020. The consumption reached 3,897,428 tons, up 31.1% year over year. In which, the export turnover of steel of all kinds reached 1,008,987 tons, rising by 67.4% compared to the first two months of 2020. This is considered a bright spot for the Vietnam steel market in February and the first two months of 2021.
Regarding crude steel, in this period, steel companies in Vietnam produced 3,192,000 tons, increasing by 28% over the same period in 2020. The consumption reached 3,126,000 tons, up 35% year over year.
Regarding construction steel, both the production output and consumption of construction steel decreased compared to January 2021 and the same period in 2020. However, for the first 2 months of 2021, construction steel production and consumption still maintained a slight increase over the same period last year.
Specifically, in the first two months of 2021, production of construction steel reached 1,625,368 tons, up 1.2% and consumption of construction steel reached 1,280,160 tons, up 1% over the same period in 2020.
As of February 28th, 2021, the construction steel inventory was nearly 704,000 tons, which is higher than in previous months. This situation explains that in February, there were only about 10 trading days due to the Lunar New Year holiday. Along with that, the third wave of COVID-19 pandemic in some localities, especially the Northeast region such as Hai Duong, Quang Ninh, and Hai Phong, has affected the production and demand of construction steel in February.
Perceiving the potentials for steel exports in 2021, experts state that the economic integration and implementation of new free trade agreements, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), EU - Vietnam Free Trade Agreement (EVFTA) will promote the steel industry to produce and export to new markets.
For the CPTPP, the removal of a series of tariffs will help Vietnamese steel enterprises to expand their export markets and import raw materials from advantageous countries, such as Australia. According to BSC Securities, CPTPP member countries are the main sources of raw materials for steel production for Vietnamese enterprises. For example, Australia is the main supplier of coal and ore to our country, accounting for 25.7% and 22.9% of the total import turnover of Vietnam, respectively. Additionally, more than 50% of steel scrap imported as raw materials for billet production are also from CPTPP countries. Some countries such as Canada and Malaysia also have great demand for importing finished steel products.
Besides these advantages, the Vietnamese steel industry also faces obstacles when five more countries are conducting anti-dumping investigations on Vietnam's galvanized steel sheet and steel pipe products, including two countries in the Southeast Asia market namely Malaysia and the Philippines.
Also, corrosion-resistant steel is subject to a tariff of 2.3 - 16.2% in Canada; steel pipes subject to a tariff of 6.97 - 51.61% in Thailand; galvanized steel subject to a tariff of 3.17 - 38.34% in South Korea, etc. The European Commission has just announced to consider extending safeguard measures for imported steel. Therefore, enterprises are advised to exploit markets with great value such as China and Cambodia besides diversifying new markets.
Compiled by VietnamCredit