Supply pressure and steel prices from the Chinese market still exist

According to Rong Viet Securities (VDSC), in 2023, China will record the highest export steel output in the period 2017-2023, and return to over 80 million tons/year. This level corresponds to the period 2014-2015, when China promoted steel exports to other countries due to oversupply.

The operating efficiency of blast furnaces in Tangshan (China's steel production center) remains at 70%. Besides, the prospect of output cuts in 2024 is unclear.

These two factors show that the amount of Chinese steel exported to countries including Vietnam will still remain high in the context of low consumption in the country's domestic market.

Therefore, VDSC notes the risk of Vietnam's steel market being negatively affected by the Chinese market (especially construction steel) in terms of sales competition with domestic steel manufacturers.

In addition, Vietnamese steel prices are influenced by fluctuations in Chinese steel prices, with high correlation between markets.

According to data from the General Administration of Customs of China (GACC), the country's steel exports in 2023 will reach more than 90 million tons, an increase of 36% compared to 2022.  This is also the highest level since 2016. Price The average steel export in 2023 is only about 706 USD/ton, down 35% compared to 2022.

The majority of steel is exported to regions with few trade barriers, including Southeast Asia, the Middle East, South Asia, Central America.

In 2023, Vietnam imports 8.3 million tons of steel from China, an increase of 63% compared to 2022 and accounting for the highest proportion of about 78% of the structure of steel export markets to Vietnam. The price of imported steel from China during the year reached an average of 681 USD/ton, down 30% compared to last year.

Sharing at the 2023 steel industry review event organized by VSA on January 13, Mr. Nguyen Viet Thang, General Director of Hoa Phat Group, said that the domestic steel market is under great pressure from the Chinese market.

"Last year, this country exported more than 90 million tons of steel and is expected to increase to 100 million tons this year. Clearly, many countries are building fences with China. If Vietnam does not take defense measures worthy trade network, certainly with its location right next to China, the pressure on this country's steel to pour into the domestic market is huge. Therefore, we hope that state agencies will have legitimate and fair support measures. ”, Mr. Thang said.

Forecasting the industry outlook, Hoa Phat representative said that 2023 is the bottom of the steel industry and the market will be better in 2024. However, the level of growth will depend on many factors such as the Chinese economy. Recovery is fast or slow, developments in the Fed's interest rate reduction roadmap and the US economic outlook.

For the domestic market, consumption has not been able to recover quickly. “Hopefully the real estate market will recover in the second half of this year which will create demand for the steel industry. We plan to increase steel production this year by over 10% with the expectation of consumption growth at the same level," Mr. Thang added.

        Vietnambiz