Steel Price Increases During the Week, Market Waits For Positive Signals In The Fourth Quarter

Turn boost back on

On August 31, the domestic steel market has increased again after 15 declines. Steel companies have announced to increase prices by the range of 110-600 VND/kg.

Specifically, Hoa Phat steel brand adjusted to increase the selling price of 260 VND with 150 VND, corresponding to 2 product lines of the company including CB240 coil steel line at 14,630 VND/kg; D10 CB300 rebar is priced at 15,280 VND/kg.

Or with VAS steel, with CB240 coil at 14,210 VND/kg - an increase of 210 VND; D10 CB300 rebar line is priced at 14,570 VND/kg - an increase of 180 VND. Currently, the domestic steel price fluctuates at 14,000 - 15,000 VND/ton depending on the type and brand of steel.

Vietcombank Securities Company (VCBS) forecasts that the recovery of real estate supply and the policy of promoting public investment will be a big driving force to boost steel consumption.

However, construction projects will be boosted when steel prices remain at a stable price level. So the growth will be reflected later when steel prices stabilize.

Specifically, the remaining capital planned for disbursement in 2022 and 2023 will be a strong motivation to promote the construction of infrastructure projects as well as the demand for construction steel.

Along with that, the real estate supply in the near future is expected to grow well in 2023 after the process of tightening capital into the real estate market in 2022. VCBS expects the policy to gradually loosen for owners. investment in 2023 will help the supply to recover significantly.

In addition, the Government is also urgently reviewing legal issues and completing the legal framework related to the real estate sector to remove difficulties to help the real estate market develop more stably.

Expectations from the Chinese market

VCBS expects steel prices to recover in the second half of 2023 after falling to the current lower price level, due to the fact that stimulus policies need time to show their impact to help revive demand. very weak of the Chinese market.

In the same vein, according to CNBC, global miners are confident the Chinese stimulus will help boost demand for steel and iron ore. In particular, China's largest iron ore suppliers are optimistic about Beijing's plan to introduce policies and stimulus measures to boost the steel industry as the country faces economic difficulties. and the real estate industry is struggling.

The Beijing government has introduced a variety of stimulus policies including an additional 300 billion yuan ($44 billion) in quotas for banks' spending and infrastructure investment - 300 billion yuan higher. was announced at the end of June.

While there are uncertainties around the strength of demand and steel production in China, miners such as Australia's Fortescue Metals Group said there was no sign of demand so far due to iron ore inventories. in Chinese ports is low.

“The market is cyclical, it is usually determined by the outlook for steel production in China… and we saw China last year, producing just over a billion tonnes of crude steel. We think China may be on track to produce a similar amount of crude steel this calendar year," said Fortescue CEO Elizabeth Gaines.

Last year, China produced 1.033 billion tons of crude steel, the first year-on-year decline since 2016. National steel production in the first seven months of this year fell 6.4 percent year-on-year.

In its forecast late last year, the China Metallurgical Industry Planning and Research Institute said it expected China's 2022 output to slow to 1.017 billion tonnes - a drop of nearly 1.5%. Compared with the last year.

Despite the volatile demand for steel in China this year due to the Covid-19 shutdowns, Fortescue's iron ore supply reached a record 189 million tonnes in the 2021/2022 financial year, allowing the industry to The company posted the second-highest earnings with a record $17 billion for the same period, financial results show.

About 88% of Fortescue's iron ore sales go to China. However, the company's earnings fell to $22 billion last year as iron ore prices fell in response to weakening economic conditions in China this year.

A Fortescue spokesperson said that, while there are uncertainties about China's steel production, the company believes Beijing "increases infrastructure investment, supports continued government policy, and is more lax. further Zero-Covid policies will continue to boost steel demand and, therefore, production. Other major iron ore suppliers are also positive about China's industrial sector.

BHP UK-Australia chief executive Mike Henry said while announcing BHP's annual results two weeks ago that he expected China to be "a steady source of commodity demand over the coming year, with support Policy support is gradually being maintained”.

Even during major shutdowns in the second quarter of the year, China's furnace utilization rate - or steel mill operations - is still resilient, he said.

“So we believe and continue to believe that when China comes out of lockdown, as there is a little more stimulus on offer and all the policy setups that we see in China right now are consistent with that. Including the recent meetings and what happened among them, we will see the Chinese economy take a new step," Henry said.

Economy & Urbanism