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Steel exports to EU increase but prices decrease

According to Vietnam Customs, the amount of steel of all kinds exported from Vietnam to the EU market reached 1.6 million tons, up 21% compared to the same period last year. The amount of exported steel increased in the first months of the year and decreased compared to the same period in the second quarter. In June, the amount of exported steel to the EU market decreased by 24.4% compared to the same period last year to more than 210,000 tons. The average selling price in June increased by 6% compared to May, reaching more than 710 USD/ton but decreased by 11% compared to the same period last year.

Data: General Department of Customs (compiled by H.M.)

The average steel selling price in the first half of this year was about 12% lower in the context of the global steel market also facing difficulties, the world steel price recorded a downward trend.

The average construction steel price traded on the London Stock Exchange in June was about 570 USD/ton, down 7% compared to the same period last year. The average HRC steel price in June was about 680 USD/ton, down 7% compared to the same period. Compared to the beginning of the year, the HRC steel price on the London Stock Exchange even recorded a decrease of 16%.

HRC steel price developments on the London Metal Exchange over the past 5 years (Source: Trading View)

Global steel prices fell amid weak demand in China, the world's largest steel producer and consumer. This prompted China to boost exports to foreign markets, putting pressure on prices. Comparing export steel prices with other steel suppliers to the EU in the first five months of the year, Vietnamese steel was still higher than steel prices from many countries such as Russia, Ukraine, and Egypt at 681 euros/ton, according to data from the European Statistical Office (Eurostat).

Source: European Statistical Office (Hoang Hiep compiled)

According to the latest report of the Vietnam Steel Association (VSA), the EU is Vietnam's largest steel import market in the first 5 months of this year with a proportion of about 26% in terms of volume, followed by the ASEAN market with 25.75%.

In the EU market, Vietnam's steel market share ranked 7th, up 13 places compared to 2020, when the free trade agreement between Vietnam and the EU (EVFTA) took effect. Specifically, as of May, Vietnam's steel market share in the EU accounted for 6.1%, a sharp increase compared to 2020 at 0.7%.

Risk of Vietnam's hot rolled steel coil being investigated by EU for anti-dumping

Although steel exports to the EU market grew in the first half of this year, many businesses are facing the risk of being investigated for trade defense.

Recently, the Trade Defense Department said that the European Commission (EC) has received a complete and valid dossier requesting an investigation to apply anti-dumping measures on non-alloy or alloy hot-rolled steel coil products imported from Vietnam. In case of initiating an investigation, the EC will send relevant parties documents including the Request, Decision to initiate an investigation and Investigation Questionnaire.

The Trade Defense Department recommends that businesses exporting products subject to investigation monitor the case and have appropriate response plans.

Currently, Vietnam has only two HRC steel production enterprises, Hoa Phat and Formosa, with a total maximum capacity of more than 8 million tons.

In a recent announcement, Hoa Phat said that hot-rolled coil output in the second quarter decreased by 10% compared to the first quarter due to difficulties in consumption in both the domestic and export markets.

The amount of imported hot-rolled coil at low prices flooding the Vietnamese market in the first half of 2024 increased sharply (6 million tons, 1.5 times higher than the same period in 2023 and exceeding the growth rate of the entire market), causing great pressure on Hoa Phat's hot-rolled coil consumption in the domestic market.

Along with that, although hot-rolled coil prices in the Vietnamese market increased briefly in February, they have continuously decreased from March to the end of the second quarter.

"The export market also faces many challenges from the surplus of hot-rolled coil steel as well as the strengthening of trade defense measures in importing countries. Thus, the consumption of construction steel is the driving force for Hoa Phat's revenue growth in the second quarter, offsetting the decline in revenue from hot-rolled coil products," the company said.

Vietnambiz