Steel market may recover strongly in the third and fourth quarters

Sharing at the China - Vietnam Steel Market Prospects Conference, Mr. Doan Danh Tuan - Vice Chairman of Vietnam Steel Association (VSA) cum Chairman of the Board of Members of Toan Thang Steel Trading Co., Ltd. acknowledged the net consumption. Steel in the third and fourth quarters will grow strongly in the third and fourth quarters thanks to a series of factors on disbursement of public investment capital and policies to promote social housing.

Specifically, the National Assembly has approved an economic recovery support package worth VND 350,000 billion for the period 2022 - 2023, of which VND 113,840 billion is spent on infrastructure development, focusing on key projects such as highways. North - South, Long Thanh airport, major logistics ports. This leads to increased demand for steel.

In addition, in February, the Government approved a credit package of VND 120,000 billion to develop social housing projects.

"These factors lead to strong growth in steel consumption in the third and fourth quarters of this year," said Mr. Tuan.

In addition, according to him, Vietnam's economic situation is forecasted to be more positive than the world, which is also a factor supporting steel prices in the coming time. Accordingly, in 2023, with forecasts of many difficulties and challenges, Vietnam's economy is still considered to have great potential for development. GDP growth is expected to reach 6.47% - 6.83%. Meanwhile, the global economic growth forecast is only about 1.5%, the US is even lower, about 0.5%; and with Southeast Asian countries, the average is about 5%.

In the long term, Mr. Tuan believes that Vietnam's steel demand will continue to grow. Currently, consumption is about 240 kg/capita and will increase to 290 kg/capita by 2030. Steel demand will focus more on alloys or high-quality steel.

According to VSA, although crude steel consumption still decreased in the first months of the year, the market started to gradually improve. Crude steel output in the first 2 months of the year fell 22% year-on-year to 2.9 million tons and consumption decreased by 10% to 3.1 million tons.

Facing the difficulties of the general market when the price of raw materials for steel production increased, production costs increased, billet prices increased slightly and the demand of mills also improved. Entering the beginning of March, the market recorded an increase in the asking price of embryos and now leveled off. However, the trading volume on the market was still active compared to the previous weeks.

However, the consumption of some finished steel products is not as expected in the construction season after Tet due to the stagnant real estate market and the tightening banking system, so construction steel consumption is low. . Sales of construction steel in the first 2 months reached 1.7 million tons, down 22.3% over the same period. In which, exports decreased by 34.5% to 262,000 tons, down 34.5% over the same period in 2022.

Sales of construction steel in the period of 2020 - 2023 (Unit: tons, source: VSA)

Most of the brands announced to increase the selling price of construction steel in the southern region when entering the second week of March. VSA believes that it is likely that the northern market will also increase in the near future to compensate for production costs. output and reduce losses.

After adjustment, the current selling price of construction steel in the southern market increased by 5-6% compared to the end of 2022. Meanwhile, according to price statistics of S&P Global, construction steel price in most regions of the world. the average increase of about 11% compared to December 2022, the domestic price of rebar in China increased by 9.6%.

VSA said that the steps to increase the price of domestic construction steel in Vietnam are relatively modest and cautious compared to the world.

Vietnambiz