The price storm of raw steel has weakened

In the first half of 2022, the market has witnessed a sharp increase in the prices of raw materials for the steel production industry due to a series of supply risks. This has pushed up world steel prices continuously.

With the domestic construction steel price, under the pressure of raw materials and high selling costs, this item has been adjusted to increase 15 times in a row with an increase of up to VND 6 million/ton, surpassing the peak in 2021.

However, at the present time, production costs have cooled down significantly, which has helped the profit margin of steel enterprises to be better than in the previous period.

According to the Vietnam Commodity Exchange (MXV), the metal MXV-Index ended September 28 at 1,528 points, nearly 20% lower than at the beginning of the year. Reportedly, one of the reasons for this decline was the weakening of many base metal commodities, especially the price of iron ore, which is traded in conjunction with the Singapore Exchange (SGX).

Compared to the peak set in early March at $165/ton, iron ore prices have dropped 40% of their value, currently trading at $94/ton.

In addition to iron ore, the prices of other steel production inputs also showed a significant downward trend. Specifically, the price of coking coal fell from $640/ton in mid-March to less than $300/ton and lower than the price at the beginning of the year.

Similarly, scrap steel prices also fell about 30% from the peak this year. Other input materials, especially the cooling of gasoline prices, have contributed to reducing cost pressure on manufacturing enterprises.

The price of iron ore - a raw material used in steel production has continuously decreased in recent times

According to experts, the trend of reducing raw steel material partly comes from the picture of iron and steel consumption in the world which is still at a rather weak level.

If in the first half of this year, the supply factor strongly affects the price of input materials as well as finished iron and steel products, then at the moment, the problem of demand is the most dominant factor.

In the context of a series of countries, especially the US and countries in the EU, continuously raising interest rates to control galloping inflation, the increased risk of recession will cast a dark shadow on the prospect of iron and steel consumption. world.

Facing barriers on the prospect of global consumption, Vietnam's iron and steel exports this year continuously faced difficulties. As of September 2022, our country has exported more than 6.1 million tons of iron and steel, down more than 30% over the same period last year. Particularly in August this year, the amount of iron and steel exports decreased by about 66% compared to the same period in 2021.

In the context that the steel industry in the EU is facing a series of risks from the energy crisis, which has caused many steel mills here to cut output, Vietnamese steel enterprises can take advantage of the opportunity to promote promote the export of steel products to this potential market.

CafeLand