When will the steel industry recover?

Steel prices fell to a 3-year low

Most recently, on September 7, a number of domestic steel enterprises just announced a reduction of 100,000-310,000 VND/ton for CB240 rolled steel products.

In this 19th price reduction, Hoa Phat Steel brand reduced the price by 100,000 VND/ton for CB240 rolled steel products in all 3 regions. After price adjustment, the price of this steel line in the North and Central regions decreased to 13.43 million VND/ton; while in the South the selling price is 13.53 million VND/ton.

The price of rebar steel D10 CB300 remains the same compared to the previous adjustment, at 13.74-13.79 million VND/ton.

Vietnam Italy Steel in the North reduced by 210,000 VND/ton for CB240 rolled steel product, price to 13.43 million VND/ton; D10 CB300 rebar steel line still maintains the price of 13.69 million VND/ton.

Viet Duc Steel also adjusted a reduction of 310,000 VND/ton for CB240 rolled steel products, bringing the selling price to 13.74 million VND/ton. As for this brand's D10 CB300 rebar product, it still has a selling price of 13.89 million VND/ton.

Kyoei Vietnam Steel reduced by 200,000 VND/ton with CB240 steel coil, at 13.46 million VND/ton. D10 CB300 steel remains unchanged at 13.71 million VND/ton.

Pomina steel also dropped 110,000 VND/ton with CB240 rolled steel at 13.48 million VND/ton, rebar steel at 14.38 million VND/ton.

Previously, steel prices dropped sharply on August 23. Every 7 - 10 days on average, domestic steel prices have a decrease. From the beginning of the year until now, domestic construction steel prices have dropped sharply 19 times in a row. After these 19 decreasing sessions, steel prices have "reached the bottom" to their lowest level in the past 3 years.

The Vietnam Steel Association (VSA) said that the reason domestic steel prices are continuously decreasing is due to slow consumption demand. Slow consumption of construction steel comes from the fact that the real estate market is still gloomy and public investment has not prospered. Not only that, domestic steel businesses also have to compete with cheap steel from China when this country continuously lowers export steel prices.

With this actual situation, VSA expects the decline in steel prices to not stop from now until the end of the year.

Civil real estate accounts for more than 60% of steel industry demand

According to the assessment of VNDirect Securities Company, the prospect of the civil real estate industry has the greatest impact on the demand for Vietnam's steel industry, accounting for about 60-65% of the entire industry's demand and affecting most steel products. finished product.

Since the second quarter of 2022, the domestic real estate industry has slowed down after a series of arrests of a number of leaders of large real estate businesses (violating regulations on corporate bond issuance), interest rates on home purchases increased and limited credit room.

More positive signals for the real estate industry have gradually appeared recently. A series of policies to unwind the real estate market have been issued since the beginning of 2023. However, actual effectiveness has not really been achieved. Typically, the 30 trillion VND support package in 2013 encountered many problems. Or currently, the 120 trillion VND credit package for social housing and worker housing is almost inaccessible to all businesses and people.

Therefore, VNDirect believes that the real estate market will only be able to recover from 2024 when the revised Land Law is approved through a series of synchronous removals of legal bottlenecks and financial pressures. Interest rates are reduced when banks create more favorable conditions to access capital as well as stimulate demand for home buyers.

Also according to VNDirect, the prolonged gloomy demand of the domestic civil construction sector will have a significant impact on the demand for construction materials in 2023. Therefore, although public investment disbursement is expected to be accelerating in the coming quarters, VNDirect forecasts that total domestic steel demand will grow by a single digit in 2023. Specifically, Vietnam's total consumption of construction steel - galvanized corrugated iron in 2023 will decrease times 9.2% - 7.0% over the same period to 9.5 million tons - 3.9 million tons.

Is it too early to forecast that the steel industry will "warm" again in 2024?

Assessing the relationship between steel prices and the real estate market, economic expert, Associate Professor - Dr. Ngo Tri Long said that the main cause is supply and demand. Currently, demand is not increasing much even though public investment has increased significantly in recent times, while supply is very large, especially the amount of steel imported from China, causing domestic steel prices to continuously decrease.

Associate Professor - Dr. Ngo Tri Long commented that to stabilize domestic steel prices, in addition to stimulating investment demand, we must promote the clearance of real estate projects, works, and public investment projects. When the real estate market becomes vibrant again, steel prices will increase, because steel mainly serves construction needs, while steel serves other industries and activities insignificantly. Therefore, the most important thing is that removing the difficulties and gloom of real estate will remove the difficulties of the steel industry.

Nguyen Ngoc Quang, General Director of Vina Kyoei Steel Company Limited, said that Vina Kyoei has reduced consumption by more than 40% compared to the same time last year.

Mr. Quang said that the reason is that domestic steel prices are affected by world steel prices, and are also greatly affected by steel imports from China into the country. In particular, the still gloomy real estate market has had a huge impact on raw material prices.

Therefore, Mr. Nguyen Ngoc Quang said that it is necessary to first remove difficulties for the real estate market.

If real estate revives, recovers and develops, other industries will develop accordingly, including the steel and construction materials industry and other supporting industries, thereby creating jobs and income for people. labor. If people have money, they will spend and invest in construction, thereby promoting socio-economic development and circulation of goods.

However, many experts also believe that VNDirect's prediction that the real estate market will recover from 2024 is too early and too optimistic. Based on the up and down cycle of the real estate market over the past decade, it may take another 2-3 years for the real estate market to recover. From there, steel consumption can flourish again.

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