Steel market in the week still has a 'gray' color

Large inventory

With the pressure of lower raw material prices, on Wednesday (July 27), many steel producers announced to lower the prices of their products with a deep reduction, up to more than 300,000 VND/ton compared to the decrease on 25/7

Specifically, in the Northern market, Hoa Phat steel is adjusted down by 310,000 VND/ton and 150,000 VND/ton for CB240 coil and D10 CB300 rebar. After adjustment, the price of these two types is about 15.6 million VND/ton and more than 16.2 million VND/ton.

Similarly, Viet Duc steel, with CB240 coil line, decreased by 300 dong, to 15,250 dong/kg; and D10 CB300 rebar is priced at 16,010 VND/kg - down 150 VND.

According to the Vietnam Steel Association (VSA), the steel industry is at the heart of the global economy, normally, the downward trend in steel and raw material prices in recent months will be welcomed by consumers.

However, that decline in steel demand is actually the result of a trend of fears about a global economic recession. Falling steel demand has a direct impact on input material prices.

Regarding raw materials, according to VSA's report, the price of iron ore grade (62% Fe) on 11/7/2022 traded at 113 USD/ton CFR Tianjin port, China, down about 33.75 USD/ton tons compared to the beginning of June 2022. This price is about 100 USD/ton lower than the highest price recorded in early May 2021 (~ 210 - 212 USD/ton); coking coking coal from 520 USD/ton to about 320 USD/ton.

Steel industry experts said that, due to the decrease in construction investment demand of the domestic market and the plunge in the price of production materials, the price of steel products has continuously adjusted down over the past time. Demand is low, leading to high inventory of products, making it difficult for production and business activities.

The total inventory of steel companies on the stock exchange by the end of the second quarter of 2022 is approximately up to 110,000 billion VND, an increase of 20,000 billion compared to the end of the first quarter of 2022. In which, Hoa Phat has more than 57,500 billion VND - 11,500 billion higher than the end of the third quarter of 2021.

Profits drop

The sharp drop in steel prices has significantly affected the profit picture of the steel industry. Most steel enterprises recorded negative profit growth in the second quarter, even losses.

Business situation in the second quarter of 2022, Hoa Phat Group recorded revenue of VND 37,714 billion, up 7.3% over the same period. Meanwhile, profit after tax reached VND4,023 billion, down 58%. Accumulated in the first 6 months, Hoa Phat recorded 82 trillion dong in revenue and 12.2 trillion dong in profit after tax, respectively down 27% compared to the same period last year, thereby completing 46% of the year plan.

In the second quarter, despite many complicated developments in the world raw material market due to the Russia-Ukraine conflict, Hoa Phat Group still maintained stable production, ensuring sufficient supply of goods for the market in the near future. country and export.

Iron ore prices on exchanges rebounded after a report showed China will roll out a bailout of up to 300 billion yuan for property developers. Illustration

Sales volume of billet, construction steel, hot rolled coil in the second quarter of 2022 reached 1.8 million tons, of which nearly 380,000 tons of construction steel were exported. Consumption of steel pipes and galvanized steel reached 159,000 and 75,000 tons, respectively.

Accumulated in the first 6 months, Hoa Phat Group has produced 4.3 million tons of crude steel, up 8% over the same period. Consumption of construction steel, billet and hot rolled coil (HRC) reached nearly 4 million tons, up 6% over the same period. In which, construction steel is 2.38 million tons, up 29% compared to the first 6 months of 2021.

After half a year, Hoa Phat's HRC sales recorded 1.4 million tons, up 7% y/y. HRC downstream products such as steel pipes and galvanized sheet reached 377,000 tons and 180,000 tons, respectively, equivalent to the consumption in the first half of 2021.

While Hoa Phat's profit decreased by 58%, many enterprises such as Hoa Sen Group, SMC Steel (SMC code), Thai Nguyen Steel (TIS code), Me Linh Steel (MEL code),... dropped more sharply, with Enterprises up to 80%.

Mirae Asset Securities Joint Stock Company believes that the high inventory has forced steel companies to lower their selling prices to stimulate demand, causing steel prices to fall from the beginning of June.

Domestic steel inventories by the end of May 2022 have reached a record level of 1.49 million tons, equivalent to May 2022 output, much higher than 56% of the average monthly output in March 2019-2021. .

Iron ore prices recovered on exchanges after the Chinese government will roll out a bailout of up to 300 billion yuan for property developers affected by the debt crisis. In addition, the Politburo of the Central Committee of China will meet on the current economic situation and carry out economic work in the second half of the year, prompting many Chinese enterprises to restart inactive blast furnaces.

BAO MOI