Pressure to reduce prices and high inventory
In the first half of 2024, the domestic steel market faces continuous downward price pressure in the context of weak domestic construction demand and strong competition from imported Chinese steel at lower prices.
Until around mid-August 2024, iron and steel prices in China rebounded from the bottom (2,788 Yuan/ton) and continuously increased in the past week or so. On August 22 (Vietnam time), steel price on the Shanghai trading floor was recorded at 3,117 Yuan/ton.
The recovery in world steel prices has partly eased the pressure on domestic steel manufacturers as inventory at the end of the second quarter was still quite large. As of June 30, the total inventory value of the steel industry on the stock exchange was estimated at about 75,000 billion VND.
Regarding domestic steel prices, updated selling prices on August 22, rolled steel products are priced from 13,580 VND/kg - 14,280 VND/kg; Bar steel prices range from 13,700 VND/kg - 14,480 VND/kg.
According to the Vietnam Steel Association, the reason why domestic steel prices continuously decrease is due to slow consumption demand and large inventories. In addition, domestic steel prices decreased because steel businesses had to compete with cheap steel from China when the country continuously lowered export steel prices.
Regarding consumption output, in the first 7 months of 2024, internal crude steel consumption and sales reached 12.41 million tons, up 17% over the same period in 2023. Of which exports reached 1.58 million tons, increased 45% over the same period last year. Finished steel product sales output reaches 16.75 million tons, an increase of 14.3% compared to the first 7 months of 2023. Finished steel product exports in the first 7 months of 2024 reach 4.895 million tons of steel, an increase of 6.8% compared to the first 7 months of 2024. same period in 2023.
Positive expectations thanks to real estate recovery
Although the steel industry faces many difficulties and challenges such as great competitive pressure and high inventory, the steel industry still has many positive prospects.
In a recent analysis report of VCBS Securities Company, it said that the consumption market recovered positively in the first 6 months of 2024. Of which, domestic construction steel consumption reached 3.8 million tons, an increase of 4 %, steel pipes increased by 3% and galvanized steel increased by 22% over the same period last year.
The reason is that the domestic real estate market has recovered well in the North and the South with the number of construction projects reaching a high level for many years, thanks to the improved legal environment as well as the low interest rate platform that stimulates growth. Likes real estate needs.
VCBS analysts said that the housing construction market has recovered strongly due to low construction material prices, creating demand for people to build houses after waiting for raw material prices. whether reduced. On the other hand, people's income will also improve after a difficult 2023.
VCBS forecasts that domestic consumption output will continue to recover well in the context of the residential real estate market in Vietnam recovering positively with the number of implemented projects maintaining high ground. At the same time, it is expected that in the second half of the year public investment will be promoted to create growth momentum for the entire industry.
