HRC steel exports plummeted by more than 70%, businesses seek support from the domestic market

HRC steel exports decrease for 3 consecutive months

According to the Vietnam Steel Association (VSA), hot rolled coil (HRC) consumption continues to decline sharply, especially in export activities. HRC steel sales in November decreased by about 18% compared to the same period last year to about 499,000 tons.

Of which, exports plummeted by more than 70% to more than 101,000 tons. However, production remained almost unchanged compared to the same period last year, at 548,108 tons. This is also the third consecutive month of export decline for this steel product.

In the past 11 months, HRC steel sales decreased by 2% compared to the same period last year to 6 million, of which exports decreased by 31% to about 2.2 million tons.

HRC exports plummet amid fierce competition from Chinese giants in global markets.

S&P Global cited data from China Customs showing that the country's steel exports reached a record 18.6 million tons, up 22.6% year-on-year. Weak domestic demand due to the real estate sector's failure to recover has forced Chinese steel producers to boost exports of cheap steel to other markets.

In addition to competing with Chinese giants, Vietnam is also under pressure from the global trade defense wave. In August, Vietnamese HRC steel faced two anti-dumping investigations and tariffs from the Indian and EU markets.

Specifically, in the EU market, the plaintiff, the European Steel Association (Eurofer), alleged that HRC steel imports from Vietnam and Egypt, India, and Japan increased overall in absolute value and market share, according to Steel Orbis.

Eurofer also provided evidence that imports of this product from Egypt, India, Japan, and Vietnam had a negative impact on the sales volume, sales price, and market share held by the EU industry. This led to significant adverse effects on the overall performance, financial situation, and employment status of the EU industry.

For India, the plaintiff, the Indian Steel Association, also gave similar reasons when requesting the government to investigate anti-dumping of HRC steel imported from Vietnam, according to Argus Media.

These steelmakers alleged that imported HRC steel was dumped. At the same time, these low prices put pressure on domestic prices, hurting the market share, profits and return on investment of domestic steel producers.

According to data from the Joint Plant Committee of the Ministry of Steel of India, finished steel imports from Vietnam have doubled year-on-year to 737,000 tonnes in the financial year from April 2023 to March 2024. This figure accounts for nearly 9% of India's total finished steel imports.

India's move comes after Vietnam also initiated HRC steel imports from the country in July.

Currently, the EU is Vietnam's second largest export market for all types of steel (after ASEAN), accounting for 25% of the share; India ranks fifth with 4%.

Commenting on the fact that Vietnamese steel has recently been the subject of continuous investigations by many countries, Mr. Chu Thang Trung, Deputy Director of the Department of Trade Defense (Ministry of Industry and Trade) told us that steel is always a "sensitive" commodity in the world.

"Steel is always the commodity subject to the most trade defense investigations in the world. At some point, steel will become the target of trade defense measures by other countries," he said.

The wave of trade defense is taking place in the context of many Vietnamese enterprises planning to increase capacity, causing them to face many risks.

By the end of June, Hoa Phat had poured VND42,384 billion into the Dung Quat Iron and Steel Complex project, an increase of 58% after one quarter. The Group is focusing on implementing the construction of the Hoa Phat Dung Quat 2 Iron and Steel Complex project, with a scale of 5.6 million tons of HRC steel/year.

It is expected that the first products of phase 1 will be launched on the market by the end of 2024. When the Dung Quat 2 project is completed, Hoa Phat's crude steel production capacity will reach over 14 million tons/year, equivalent to the Top 30 largest steel enterprises in the world.

The Hoa Phat Dung Quat 2 iron and steel production complex has a scale of 280 hectares, with a total investment of VND 85,000 billion.

To consume the amount of steel from Dung Quat 1 and 2, the group is having to promote export channels, including finding new markets.

Sharing in the webinar "Steel industry and Hoa Phat's health", Hoa Phat Group's Finance Director (Code: HPG), Ms. Pham Thi Kim Oanh said "It took 4 years to reach a capacity of 5.6 million tons, so consumption output will gradually increase according to the market, under sales pressure".

Finding support from the domestic market
With export difficulties, businesses are promoting domestic sales. This is clearly shown in the structure of the HRC steel consumption market. Accordingly, the proportion of exports in the domestic HRC steel consumption structure is about 30%, much lower than the 50% level of 11 months of 2023. In November alone, this figure was only about 20% while last year it was nearly 60%.

The amount of HRC steel consumed in the domestic market in the first 11 months of this year reached nearly 3.9 million tons, an increase of 28% over the same period last year.

The support of the domestic market comes from the production of downstream products using HRC as input materials (galvanized steel, steel pipes) which are recovering.

Accordingly, in 11 months, galvanized steel output increased by 26% over the same period to 5.2 million tons. At the same time, sales volume also increased by 33% to more than 5 million tons. Similarly, steel pipe output increased by 4% to 2.25 million.

According to VSA, the domestic steel market recorded positive impacts from the demand for galvanized steel and construction steel to re-roof houses and repair structures damaged by Typhoon Yagi and some storms in the Central region in September.

In addition, Vietnam is also investigating anti-dumping of HRC steel imported from China and India. Pressure from imported steel from China is starting to show signs of cooling down. November was also the first month this year to record a year-on-year decline in steel imports from China, down 20% year-on-year to 876,000 tonnes. Compared to October, the amount of steel imported from this country fell by half.

Previously, the investigation started at the end of July, with Hoa Phat and Formosa as the plaintiffs. These two enterprises claimed that steel imported from India and China was dumped in Vietnam with a margin of 27.83%.

Currently, Vietnam has only two enterprises producing HRC steel with a maximum capacity of about 8 million tons for Formosa (5 million tons) and Hoa Phat (3 million tons).

The domestic market is expected to continue to have bright spots in the coming time. Talking to us, Mr. Dao Minh Chau, Deputy Director of Stock Analysis at SSI Research, said that next year the steel industry will benefit from the recovery cycle of the real estate industry and the promotion of public investment. This recovery momentum of the steel market may last for the next 2-3 years.

In a recent report, Vietnam Steel Corporation (VNSTEEL) also expects the domestic market to be more vibrant in the last months of the year. However, this enterprise also believes that the domestic steel market still has many potential challenges due to the general impact of the world steel market and domestic consumption demand has not really recovered.

Vietnambiz