Steel industry enterprises still face many difficulties.

Many opportunities from the domestic market

According to the Vietnam Steel Association (VSA), in 2024 and 2025, the steel industry may witness an increase in domestic steel consumption thanks to large government projects and private investment in infrastructure. Promoting infrastructure development programs such as the construction of highways, airports, railways and smart urban areas will create great demand for steel for the construction industry.

In addition, the gradual recovery of international markets such as the US, EU and ASEAN after the pandemic also creates export opportunities for Vietnamese steel enterprises. Despite fierce competition from major steel-producing countries such as China, India and Japan, with increasingly improved steel quality, combined with the advantage of low production costs, Vietnamese steel still has the opportunity to increase exports in the time to come.

The latest report of VSA shows that in the first 10 months of 2024, crude steel production reached more than 18.194 million tons, up 16 percent compared to the same period in 2023. Domestic crude steel consumption and sales reached 17.796 million tons, up 16 percent compared to the same period in 2023. Of which, exports reached 2.322 million tons, up 56 percent compared to the same period in 2023 (mainly flat steel billet exports). Production of finished steel products of all kinds reached 24.473 million tons, up 8.5 percent. Finished steel sales reached 24.472 million tons, up 15.6 percent compared to the first 10 months of 2023.

According to the VSA, growth was recorded in all products, of which cold rolled coil (CRC) reached the highest at 41.9 percent, galvanized and color-coated steel 35.1 percent, construction steel 15.7 percent and steel pipes 6.4 percent, while hot rolled coil (HRC) decreased slightly compared to the same period in 2023. Finished steel exports in the first 10 months of 2024 reached 7.119 million tons, up 6.2 percent compared to the same period in 2023. Growth rates were even in all products except HRC, down 26.3 percent.

Proactively facing price and environmental challenges

According to analysis by experts from MBS Securities Company, construction steel and HRC prices will have a positive recovery from the fourth quarter of 2024 when pressure from China is reduced. In 2025, MBS expects construction steel and HRC prices to increase by 7 percent and 6 percent year-on-year, reaching US$611 and US$590 per ton, respectively.

Therefore, MBS estimates that for Hoa Phat, net profit in the 2024-2025 period could increase by 74 percent and 51 percent year-on-year thanks to increased output and improved gross profit margin. Furthermore, Hoa Phat can regain market share thanks to anti-dumping tax on HRC, narrowing the gap between Chinese and Vietnamese steel. Similarly, for HSG, MBS forecasts that net profit in 2024-2025 may grow by 2.33 percent and 6 percent respectively over the same period.

Nam Kim Steel is also forecasted by MBS to benefit from the recovery in output and selling prices, and improved export demand as the EU and US market prospects are expected to be positive. Nam Kim's after-tax profit will enter a recovery cycle with growth rates of 287 percent and 111 percent, respectively, compared to the same period in 2023 in the 2024-2025 period thanks to revenue growth of 20 percent and 17 percent.

However, experts say that the challenge is still huge as fluctuations in input material prices such as iron ore, coking coal and energy are always factors that put great pressure on steel enterprises. Besides, there is fierce competition from international competitors, especially from China and India.

Along with that, the requirements for environmental protection are increasing not only from Vietnam but also from major export markets. The problem of investing in technology to reduce environmental pollution requires a large amount of money that not all businesses can afford. Currently, many steel enterprises have applied clean production technology and expanded exports, contributing to increasing the value of the steel industry. However, it is still necessary to continue to innovate technology, improve product quality and implement green development solutions to cope with challenges.

On the business side, at Hoa Phat Group Joint Stock Company (HPG), in the third quarter of 2024, crude steel sales increased by 17 percent compared to the same period last year; Construction steel sales in the first 9 months of 2024 increased by 29 percent year-on-year, led by an 84 percent increase in exports and a 16 percent increase in domestic sales thanks to the recovery of construction activities.

For Hoa Sen Group Joint Stock Company (HSG), the consolidated financial report for the 2023-2024 fiscal year (FY) (from October 1, 2023 to September 30, 2024) recorded a 35 percent increase in output over the same period. HSG's after-tax profit also improved positively from VND30 billion in the 2022-2023 fiscal year to VND510 billion in the 2023-2024 fiscal year, an increase of nearly 1,600 percent and completing 102 percent of the business plan.

HSG said that Hoa Sen corrugated iron, Hoa Sen steel pipes, and Hoa Sen plastic pipes always meet the strictest standards of all export markets. And to take advantage of the domestic market, HSG has promoted the ownership of more than 115 Hoa Sen Home supermarkets nationwide, trading in more than 15 product lines with more than 3,000 basic construction material codes..., while innovating sales methods and approaching customers through e-commerce.