(Hanoi Iron and Steel - HSV) Steel prices have had 2 weeks of stable selling prices, although difficulties are still unavoidable, however in the fourth quarter there will still be opportunities for steel manufacturing enterprises in Vietnam.
The steel market is waiting for positive signals in the fourth quarter. Because as usual, this is the period when steel demand increases as construction projects rush to speed up progress.
The Vietnam Steel Association (VSA) believes that whether or not demand can increase in the fourth quarter of 2022 still depends on many factors, especially when inventories are still high and manufacturers need time to process.
According to the Vietnam Commodity Exchange (MXV), the MXV-Index Metal index ended the trading day on September 28 at 1,528 points, nearly 20% lower than at the beginning of the year. One of the reasons for this decline is the weakness of many basic metal products, especially the price of iron ore traded with the Singapore Exchange (SGX).
Compared to the peak set in early March at 165 USD/ton, SGX iron ore price has lost 40% of its value, currently reaching 94 USD/ton.
In addition to iron ore, prices of other important input materials also show a significant downward trend. The price of coking coal fell from 640 USD/ton in mid-March to less than 300 USD/ton and lower than the price at the beginning of the year.
Scrap steel prices also decreased by about 30% compared to the peak this year. Other inputs, especially the cooling of gasoline prices, have contributed to reducing cost pressure on manufacturing enterprises.
The previous decline in construction steel prices made it easier for investors to access public investment projects. However, the current public investment disbursement speed is still quite slow. According to the Ministry of Finance, in the first 8 months of the year, public investment disbursement progress reached about 35% of the 2022 plan.
Regarding international trade activities, according to MXV, in the context that the steel industry in the EU region is facing a series of risks from the energy crisis, causing many factories to cut production and face closure, Vietnam can take advantage of the opportunity to promote exports to this potential market.
The competitiveness of Vietnamese steel, especially construction steel, is also more open in the context of China restricting steel exports to aim at reducing carbon emissions. The end of the year will also be the construction season for this country, so the consumption picture promises to improve.
According to a recent forecast by the World Steel Association (Worldsteel), steel output in 2022 will only reach 1.1 billion tons. This marked the biggest contraction in steel output from January to July of the year since the financial crisis of 2008-2009.
The main factor in the entire debate is China, whose economy is in recession, directly affecting its own crude steel output with a decrease of 6.4% in July 2022 and a decline in domestic steel demand. At the same time, prices are having an adverse impact on the country's own steel exports and global steel prices.
Data show that China's steel industry is in a vulnerable state. The China Iron and Steel Association (CISA) said that from January to July, the total gross profit of 90 key steel building members fell by 63.4%. The main reason is high raw material prices and falling steel prices.
CISA also said that in July, 70% of member businesses were operating in deficit. Another sign that things are grim these days comes from the world's largest steel producer Baoshan Iron & Stell.