(HSV VIETNAM GROUP) – The steel market is forecast to recover strongly in the third and fourth quarters thanks to factors such as increased public investment, credit loan packages for social housing projects and a more positive economic situation in Vietnam compared to the world average.
Sharing at the China-Vietnam Steel Market Outlook Conference, Mr. Doan Danh Tuan - Vice Chairman of the Vietnam Steel Association (VSA) and Chairman of the Board of Members of Toan Thang Steel Trading Co., Ltd. acknowledged that steel consumption in the third and fourth quarters will grow strongly in the third and fourth quarters thanks to a series of factors on public investment capital disbursement and policies to promote social housing.
Specifically, the National Assembly approved an economic recovery support package worth VND 350,000 billion for the period 2022 - 2023, of which VND 113,840 billion is reserved for infrastructure development, focusing on key projects such as the North-South expressway, Long Thanh airport, and large Logistics ports. This leads to increased demand for steel consumption.
In addition, in February, the Government approved a credit package of 120,000 billion VND to develop social housing projects.
"These factors lead to strong growth in steel consumption in the third and fourth quarters of this year," Mr. Tuan said.
In addition, according to him, Vietnam's economic situation is forecast to be more positive than the world's, which is also a factor supporting steel prices in the near future. Accordingly, in 2023, despite forecasts of many difficulties and challenges, Vietnam's economy is still considered to have much development potential. GDP growth is expected to reach 6.47% - 6.83%. Meanwhile, the global economic growth forecast is only about 1.5%, the US is even lower, about 0.5%; For Southeast Asian countries, the average is about 5%.
In the long term, Mr. Tuan believes that Vietnam's steel demand will continue to grow. Currently, consumption is about 240 kg/capita and will increase to 290 kg/capita by 2030. Steel demand will focus heavily on alloys or high quality steel.
According to VSA, although crude steel consumption still decreased in the first months of the year, the market began to gradually improve. Crude steel output in the first 2 months of the year decreased 22% over the same period to 2.9 million tons and consumption decreased 10% to 3.1 million tons.
Facing the difficulties of the general market when the price of raw materials for steel production increases, leading to increased production costs, the price of steel billet increases slightly and the demand of factories also improves. Entering the beginning of March, the market recorded an increase in embryo offering prices and is currently leveling off. However, the number of transactions on the market is still vibrant compared to previous weeks.
However, the consumption of some finished steel products is not as expected in the construction season after Tet due to the stagnant real estate market and the banking system tightening credit, so construction steel consumption is low. Construction steel sales in the first 2 months of the year reached 1.7 million tons, down 22.3% over the same period. Of which, exports decreased by 34.5% to 262,000 tons, down 34.5% over the same period in 2022.
Most brands announced an increase in construction steel prices in the Southern region when entering the second week of March. VSA believes that it is likely that the Northern market will also increase in the near future to compensate for production costs and reduce losses.
After the adjustment, the current construction steel price in the southern market increased by 5-6% compared to the end of 2022. Meanwhile, according to S&P Global's price statistics, construction steel prices in most regions of the world increased on average by about 11% compared to December 2022, and the price of domestic rebar in China increased by 9.6%.
VSA believes that the steps to increase domestic construction steel prices in Vietnam are relatively modest and cautious compared to the world.
Ha Diem HSV