(Hanoi Iron and Steel HSV) - The decline in demand in many markets around the world has made the business picture of the steel industry somewhat "bleak", in which export activities are also greatly affected.
There has been a trade deficit of more than 2.2 million tons of steel
According to data from the Vietnam Steel Association (VSA), finished steel production in the first 8 months of 2022 reached 20,808 million tons, down 5.8% over the same period in 2021. Finished steel sales reached 19,261 million tons, down 1.6% over the same period in 2021. Of which exports reached 4,562 million tons, down 7.4% over the same period. last year. According to data from the General Department of Customs, in August alone, Vietnam had a trade deficit of 272,000 tons of iron and steel of all kinds, bringing the total trade deficit in 8 months to more than 2.2 million tons, in contrast to the same period in 2021 with a trade surplus of nearly 330,000 tons.
According to the Vietnam Commodity Exchange (MXV), major economies in the world are tightening their currencies to curb escalating inflation, the demand for goods in general and iron and steel in particular is decreasing, putting Vietnam's steel industry into many difficulties and challenges during this period. In particular, the limitation of the steel industry is that it can only meet construction needs, while steel in the fields of manufacturing, processing, mechanical engineering or supporting industries cannot yet meet.
However, in terms of exports, according to experts and businesses, Vietnamese steel businesses still have many opportunities in the last months of the year because steel factories in Europe (EU) have had to close due to rising energy costs. In particular, Vietnam's steel industry can benefit from tensions between Russia and the EU. Rong Viet Securities Company (VDSC) said that the EU's ban on importing Russian oil from December will worsen the electricity shortage in the region. Plus, the EU will need time to find alternative energy sources, so cheaper steel supplies in Asia become more attractive as EU steel demand recovers.
In addition, according to many forecasts, steel prices are showing signs of recovery due to increased storage demand and some steel factories in China are showing signs of gradually restoring production activities after a long time, thereby helping businesses earn higher profit values.
Look for opportunities
In fact, Vietnamese steel enterprises are also focusing on promoting export activities to the EU market, especially when the Free Trade Agreement between Vietnam and the EU (EVFTA) takes effect. If in June 2020, steel exports to the EU market accounted for only 3.4% of total steel export turnover, then this number after 2 years has increased to 20.51%, corresponding to an increase of more than 6 times. According to VSA, the EU market currently accounts for nearly 18% of the total export output of domestic steel enterprises, only behind the markets in ASEAN countries and the US.
Thanks to taking advantage of these advantages, the export situation of many businesses is still positive. Recently, Hoa Phat Group said that exports of prestressed steel (PC Bar and PC Strand) have reached 22,000 tons, up 54% over the same period last year. The total output of prestressed and drawn steels of Hoa Phat Metal Manufacturing Company reached more than 92,000 tons, an increase of 3% over the same period. Of which, exports contributed up to 40% with more than 36,500 tons. At the end of September 2022, Hoa Phat said it will put into operation PC Strand line No. 2 at the Prestressed Steel Factory (Dung Quat Economic Zone - Quang Ngai) to increase output by 2 times in 2021. Hoa Phat Steel's export market has expanded to 25 countries.
At Hoa Sen Group, exports are also actively expanding, having exported to more than 87 countries and territories with product quality that meets international standards, export output has exceeded 100,000 tons/month. Nam Kim Steel also hopes to continue to benefit from the trend of boosting steel imports into the EU, in the context that the EU's July steel output decreased by 6.7% over the same period. Nam Kim's main export markets include Europe (accounting for 50% of export volume), the US (20% of export volume) and other ASEAN countries...
However, the export situation of steel enterprises is still difficult. According to VDSC, trade policies of major markets are changing in a direction unfavorable for Vietnam. In particular, the EU market is increasing protection measures for Vietnamese galvanized steel. From July 1, 2022 to June 30, 2024, Vietnam's metal-coated steel sheets (group 4A) are managed according to quotas.
Besides, according to businesses' feedback, the steel industry's business situation is still facing difficulties in terms of rising raw fuel prices, increased transportation costs by up to 30%, banks tightening lending policies... Therefore, many businesses are having to find alternative raw material sources, innovate technology, improve quality, diversify markets... or reduce operations to avoid losses. In addition, according to experts, steel businesses should take advantage of opportunities from moves to promote public investment in the domestic market.