Chairman of Hoa Phat: Steel market this year is very difficult, steel price will go down

Speaking at the annual meeting of shareholders on the morning of May 24, Chairman of Hoa Phat Group Corporation Tran Dinh Long said that this year's steel industry will be very difficult, no longer as favorable as in previous years due to reduced demand in the future. when the supply is constant. This will put pressure on steel prices from now until the end of the year.

The Zero Covid policy caused China's steel demand to plummet while this is the world's largest steel consuming market. Therefore, the blockade of China causes the world's aggregate demand to also decline.

Besides, the increase in input costs makes the profits of steel enterprises shrink. Typically, the tension between Russia and Ukraine caused the price of coke to increase by 200 USD/ton.

Currently, domestic raw materials can only meet 20-30% of the demand of steel factories. Therefore,   of domestic steel price is anchored quite tightly compared to the movements of world raw material prices.

In 2022, Hoa Phat Group expects its 2022 profit to reach VND 25,000 - 30,000 billion, lower than VND 34,521 billion of last year.

"Please wait until the second and third quarters, the end of the year will see how tragic it is and everyone will understand why I am cautious in my business plan in 2022. This year's steel industry will be difficult and no longer favorable. As before. Prospects from now until the end of the year, steel prices may continue to fall," Mr. Long told shareholders.

In addition, according to Mr. Long, the expectation that Vietnam will benefit from the supply shortage due to the Russia-Ukraine conflict is completely different from reality.

Although consumption has decreased, Hoa Phat has no intention of reducing capacity because this group has the advantage of scale.

"Although steel prices are in a downward trend, we will still operate at full capacity to take advantage of scale. Besides, Hoa Phat will boost sales", said Mr. Nguyen Viet Thang, General Director of Hoa Phat Group said.

As usual, the period from March to May is the peak of the construction season, leading to an increase in steel demand. However, this year the rule is reversed when in April, sales of construction steel fell 39% compared to March and down 33.6% compared to the same period in 2021, according to data of the Steel Association. Vietnam (VSA).

VSA said that distributors are looking for ways to reduce inventory, so factory shipments are much lower than usual.

By the end of April, construction steel inventories at factories were about 900,000 tons, nearly double the same period last year.

Hoa Phat Group also recently said that sales of construction steel in April reached nearly 300,000 tons, down 30% compared to the same period last year, mainly because the inventory at dealers from the previous month was still low. .

Currently, Hoa Phat is still leading Vietnam's construction steel market share with 35.9%.

The sale of dipping sauce causes factories to boost exports to other markets. However, in the long term, Mr. Long said he will mainly focus on the domestic market and reduce the proportion of exports.

"Last year, Hoa Phat exported quite well, accounting for 30% of total output. However, in the long-term, we will still focus more on the domestic market because exports have too many market risk factors. , depends too much on the policies of the host country. In the coming time, Hoa Phat's export proportion may only be around 10-15%", Mr. Long shared at the general meeting of shareholders.

Vietnambiz