Hoa Phat Group: Ready to reopen the last blast furnace operation in the third quarter, Vietnam's steel output promises robust growth
Steel NewsDate: 19-07-2023 by: Ngoc Cam
Hoa Phat Group plans to reopen the last blast furnace in the third quarter of 2023 when the market shows signs of recovery after the Covid-19 pandemic. HPG's second quarter of 2023 profit is expected to continue to increase thanks to favorable input costs.
KB Securities (KBS) said that Hoa Phat Group is ready to reopen the last blast furnace at Dung Quat in the third quarter of 2023 to meet the market demand that has begun to recover.
Hoa Phat Group Joint Stock Company has currently operated 6/7 steel furnaces, including: 3 BOF furnaces in Hai Duong, 3 BOF furnaces in Dung Quat and 1 EAF furnace in Hung Yen with an estimated total operating capacity of 85% of total design capacity. HPG's production output in May 2023 has reached the highest level since October 2022.
Previously, the group was forced to stop operating 4 blast furnaces, including 2 blast furnaces in Hoa Phat Dung Quoc and 2 blast furnaces in Hai Duong in November 2022 in order to maintain production and business activities in the difficult context due to the pandemic. However, the enterprise does not completely close the blast furnaces, but only maintains the lowest temperature to optimize costs. Hoa Phat leaders shared, the cost to restart the blast furnace is about 30-40 billion VND/furnace.
The steel market in Vietnam in particular and the world in general has shown many clear signs of recovery when consumption volume increases and steel prices are kept stable. Hoa Phat's inventory from the beginning of the year until now has also been gradually released.
Excluding hot-rolled coil export orders, which increased sharply in April and May, 2023, the consumption of the whole steel industry in the first 5 months of this year remained weak. However, experts' forecasts show that consumption volume of the whole industry will recover strongly by the end of the third quarter of 2023 and the beginning of the fourth quarter of 2023, before a stronger growth in 2024.
Improved steel consumption demand helps stabilize steel prices in the second half of this year and may grow from 2024. Input materials (iron ore, coke, scrap steel) plummeted, causing prices to decline. HRC steel in Vietnam also fell to the 5-year average. Currently, Vietnam has the two largest HRC factories, Hoa Phat and Pomina with a total capacity of up to 7 million tons/year, produced on the modern continuous casting production line of Danieli Group - Europe, the products all meet many strict standards such as JIS, MS, SAE, BS, EN,...
For fastidious markets such as the US and EU, exported steel products must prove that their origin is not from China. Therefore, the self-reliance in the source of base steel (HRC) produced in Vietnam helps sheet steel, cold rolled coil (CRC), and pipes companies open up many export opportunities.
According to experts, Hoa Phat's 7 blast furnaces have a total capacity of over 8 million tons, when reopening 7/7 blast furnaces, Hoa Phat Group's profit is expected to increase significantly, but the selling price of finished steel may slow down. Specifically, the price of raw materials (iron ore, coke, scrap steel) in the second quarter of 2023, respectively, decreased by 10%, 44% and 18% compared to the first quarter of 2023. Meanwhile, the price of construction steel and HRC in Vietnam decreased by 6% and 15% compared to the first quarter of 2023.
Hoa Phat's restoration of blast furnace production in the third quarter of 2023 will help Vietnam's steel output significantly increase, meeting the consumption demand of robust importing countries such as ASEAN, the United States, Europe, and Australia. …To receive more latest news about the Vietnam steel market, please get in touch with MRS Steel via Email at vanloc@mrssteel.com.vn for thoughtful support!
