Will construction steel prices continue to rise thanks to public investment?

However, VSA Chairman said that construction steel prices are unlikely to spike sharply in the first and second quarters and will prosper in the third and fourth quarters.

Construction steel price can break the peak in 2021?

Normally, the first months of the year are not the peak of construction, steel consumption is quite low. However, right from January, sales reached more than 1 million tons, up 28% over the same period in 2021.

The price of domestic construction steel also has two consecutive increases and averages about 16,600-17,200 VND/kg depending on each business, product category and specific region.

Particularly, there are enterprises like Ponima who raise steel prices to 17,800 VND/kg, nearly reaching the peak in 2021 of 18,000 VND/kg of Hoa Phat steel brand. Many people hypothesize that with this positive start, construction steel prices can break the peak in 2021 and sublimate thanks to public investment?

Talking to the writer, Mr. Nghiem Xuan Da, Chairman of the Vietnam Steel Association (VSA) said that although the price of construction steel in 2021 has increased, it has not been as high as in 2008.

Specifically, in July 2008, steel prices in the world increased and peaked when the price of billet was over 1,000-1,200 USD/ton, leading to domestic steel price up to 22-23 million dong/ton. But this scenario is unlikely to happen in 2022.

"In fact, steel prices have been adjusted up from the beginning of the year. However, at this time, it is not possible to confirm that construction steel prices in 2022 can break the peak in 2021 because the price of steel materials in the world fluctuates from time to time. day," said Mr. Da.

Talking more about the steel price outlook in 2022, VSA Chairman said that construction steel price in 2022 will be stable and slightly adjusted according to market demand, around the price at the end of 2021, about 15,900-16,100 VND/kg depending on the market demand. categories and brands.

"The expectation of a sudden spike in steel prices in 2022 is also unlikely to happen in the first and second quarters. It is expected that according to the production cycle, steel products will consume well when entering the third and fourth quarters." Mr. Da said.

Growth engine for the steel industry

If in 2021, the growth driver of the steel industry is from increasing exports, this year, the industry expects a lot of public investment projects and the economy is reopened. Specifically, public investment in infrastructure projects will boost domestic steel demand, especially construction steel.

Due to the impact of the COVID-19 pandemic lasting for the past 2 years, Vietnam's GDP has decreased to 1-2%, but Vietnam's steel industry still has positive growth.

Mr. Tran Tuan Duong, Vice President of Vietnam Steel Association, Vice Chairman of Hoa Phat Steel Group, said at the conference to summarize the steel industry in 2021 that the domestic market has slowed down, but steel enterprises have boosted exports. and become a net exporter of steel, the largest production output in Southeast Asia.

According to the medium-term public investment plan for the 2021-2025 period approved by the National Assembly, the total planned public investment capital reached VND 2.8 million billion, an increase of 43.5% compared to the plan for the 2016-2020 period.

Traffic projects accounted for the largest proportion when the total expenditure on transport projects reached more than VND 570 trillion, equivalent to 42.3% of the central budget.

Typically, large projects such as the construction of the North-South expressway in the east in the 2021-2025 period, the Long Thanh international airport in the first phase, etc.

VSA Chairman believes that construction steel manufacturers can benefit from this trend. However, the level of competition between businesses is increasingly fierce in terms of selling prices and encroaching on each other's market shares.

Currently, Hoa Phat is still leading with a market share of over 36%.

However, Mr. Da once again emphasized: "Domestic steel prices will hardly have strong fluctuations because of abundant domestic supply, low demand for construction steel, slow disbursement of capital, and poor labor force. affected by the uncontrollable epidemic…”

In the short term, VSA believes that the continuous increase in the price of raw materials for steel production will promote steel products to establish a new price level in the first quarter.

The cost of input materials for steel production increased sharply at the beginning of the year.

Specifically, the price of coking coal for export at the Australian port on February 10 traded at $391.75/ton FOB, up nearly 17% compared to January.

Or iron ore price also recorded an increase of 19% to 149.7-150.2 USD/ton.

VSA believes that the price of imported materials will continue to increase, affecting the domestic construction steel price in the coming time.

Vietnambiz