Vietnamese steel enterprises expect growth in 2023.

Production and consumption have increased again

According to the latest report just released by the Vietnam Steel Association (VSA), in February 2023, the situation of steel production and consumption has not improved over the same period but has increased again compared to January. Specifically, finished steel production reached 2.35 million tons, up 21.91% compared to January 2023; steel sales of all kinds reached 2.08 million tons, up 18.13% over the previous month.

Simultaneously, the steel market is forecasted to recover strongly in the third and fourth quarters of 2023 thanks to increasing public investment, credit packages for social housing projects, and the positive economic situation of Vietnam compared to the world average.

Sharing about the prospect of Vietnam's steel market, Doan Danh Tuan, Vice Chairman of VSA, Chairman of the Board of Members of Toan Thang Steel Trading Co., Ltd., said that the National Assembly had approved an economic recovery support package worth VND350,000 billion for the period 2022 - 2023. In addition, VND113,840 billion would be spent on infrastructure development, focusing on key projects such as the North-South expressway, Long Thanh airport, and large logistics ports. This led to increased demand for steel. Additionally, in February, the Government approved a credit package of VND120,000 billion to develop social housing projects. These factors lead to strong growth in steel consumption in the third and fourth quarters of this year.

In the long term, Tuan believed that Vietnam's steel demand would continuously grow. Currently, consumption is about 240 kg/per capita, and it will increase to 290 kg/per capita by 2030. As a result, steel demand will focus more on alloys or high-quality steel.

Tran Thi Khanh Hien, Director of the Analysis Division of VNDirect Securities JSC, said recently, there have been many positive signals for the steel industry, such as the world steel supply increased again after many quarters of decline, the profit margin of the Chinese steel industry tended to bottom, and the high-priced inventories of steel enterprises fell sharply at the end of the fourth quarter of 2022. Therefore, it can be said that the difficult time for the steel industry has passed.

Bright future expectations

On the business side, Hoa Phat Group said that 2022 was a difficult year for the steel industry. The Russia-Ukraine war, combined with the post-Covid-19 recession, soaring inflation, and tight monetary policy, have slowed down the growth of the entire industry in the last three quarters of 2022. However, in 2023, Hoa Phat believed that the positive point was that inflation had shown signs of peaking, the exchange rate was better controlled, and there was no longer a "hibernation" period, as pessimistic as the late 2022 period. Hoa Phat Group realized that the steel industry had gone through the most difficult period and was on the way to recovery.

However, Hoa Phat has been closely monitoring market developments to adjust their production and business activities flexibly, ensuring jobs for employees. Simultaneously, try to invest and get new orders to recover business results. For example, at the beginning of 2023, Hoa Phat recorded many export orders to markets in the Americas, Asia, and Australia. As a result, steel export output (bar steel, construction coil, and high-quality coil steel) in January 2023 reached 46,000 tons.

At the annual general meeting of shareholders held on March 10, Le Phuoc Vu, Chairman of the Board of Directors of Hoa Sen Group JSC, said that the worst time in the steel industry had passed, the company had run out of high-priced inventory and only had low inventory. However, since February 2023, the business has started to be profitable again, with about VND50 billion and in March 2023, it is expected to earn hundreds of billion VND. Currently, Hoa Sen's inventory is enough for May 2023, the low price of steel that Hoa Sen bought last year was US$510/ton, and the average inventory was about US$630/ton. Meanwhile, the current price of Formosa's hot rolled coil (HRC) steel has reached US$680/ton, and orders from China are also around US$700/ton. Therefore, Hoa Sen will have a good profit in the coming months to cover the loss in the first four months of the financial year 2022-2023.

Sharing at the webinar "Prospects of China - Vietnam steel market" recently, Luan Shorden, Deputy General Director of SUMEC, said that Vietnam had the great export potential to the Chinese market as there was room for future crude steel capacity increase, along with favorable export cost conditions thanks to the good response to cheap and fast factors because of the geographical distance between the two countries. In the long term, according to Luan Shorden, Vietnam will enhance its role in supplying China with embryos. Specifically, Vietnam was able to export steel billet continuously and stably to Southeast Asia when prices were favorable. Moreover, the right materials and faster shipping make it easier for Vietnamese billets to be exported to China. Thus, the continued addition of crude steel capacity will maintain this commercial activity.