Steel News

Nam Kim's business activities are expected to benefit directly when steel demand in a series of key export markets is forecast to grow strongly in 2024.1. Nam Kim steel exports will grow strongly by the end of 2023According to the latest report of the World Steel Association, global steel demand in 2023 is estimated to increase by 1.8% compared to 2022, a positive improvement compared to the decrease of 3.3% in 2022. In 2024, global steel demand is expected to continue to increase by 1.9%, reaching 1.84 billion tons with main export markets from the European Union (up 5.8% compared to 2023), India (up 7.7%) and the ASEAN region (up 5.2% compared to 2023).This creates favorable conditions for several Vietnamese steel enterprises, especially Nam Kim Steel Joint Stock Company. NKG is one of the largest steel export brands in Vietnam with strength in galvanized steel products. More than 60% of the group's consumption comes from key markets such as the EU, ASEAN and Australia.Besides, Nam Kim Steel is enjoying the lowest anti-dumping duty rate in many Vietnamese steel import markets such as Canada, Mexico, Australia and Malaysia.Latest data shows that Nam Kim Steel's main export markets are all in the group with a positive recovery in steel output in the first 10 months of 2023 like the EU region (up 86.2% over the same period in 2022) and Australia (up 9.1%).Regarding future development orientation, Nam Kim Steel is focusing on exploiting the EU, Australia, ASEAN markets, then the US due to barriers of tax rates of up to 25% as well as high Vietnam-US freight rates.Currently, Nam Kim Steel is in the top 3 enterprises with the largest market share in Vietnam (accounting for 17.3%). Notably, for steel pipe products, Nam Kim Steel is experiencing continuous market share growth in recent years. In 2022, NKG's steel pipe consumption growth rate was 3 times higher than the growth rate of the entire industry, accounting for 7.4% of the entire market share.2. Vietnamese steel benefits from the gradual recovery of steel pricesThe business activities of Nam Kim in particular and steel businesses in general will continue to benefit from the recovery in domestic steel prices. After 19 consecutive price reductions in the first 9 months of 2023, steel prices of all types in Vietnam have begun to recover with 3 consecutive price increases since the end of November 2023. The Vietnam Steel Association (VSA) predicts that domestic steel prices may increase slightly in the near future with a range of 100,000 - 150,000 VND/ton.The reason for the increase in domestic steel prices comes from the increase in input costs (iron ore, electricity, steel scrap,...) along with a clear increase in world steel prices. Hot rolled steel prices in the US and EU from the beginning of October 2023 have increased by 1,146 USD/ton and 727 USD/ton, respectively. World construction steel prices also increased dramatically in early November 2023 when they surpassed 3,800 CNY/ton.Global steel prices increased mainly due to limited steel supply and prolonged delivery times due to the impact of military and political conflicts. At the same time, a series of steel furnaces in the EU temporarily stopped operating for maintenance while steel demand is still increasing. In addition, the Chinese government also promotes recovery of the real estate market, boosting demand for steel in the near future.

On December 4th, the member fund KITMC Worldwide Vietnam RSP Balanced Fund under Kim Vietnam Fund Management purchased 1 million shares of Nam Kim Steel Joint Stock Company. As a result, the fund group's ownership increased to 13.7 million shares, equivalent to 5.2% of the capital, becoming a major shareholder of NKG, accounting for 1.52% of the capital.The transaction took place on December 4th and based on the closing price of December 4th, the share volume is valued at around 24 billion VND. As of now, Nam Kim Steel has four major shareholders: Chairman of the Board, Mr. Ho Minh Quang (14.2% of capital), Unicoh Specialty Chemicals (5.03% of capital), SMC Trading Investment Joint Stock Company (5% of capital), and the Kim Vietnam Fund Management group.According to information from DSC Securities, Nam Kim Steel has planned to expand into a higher-grade galvanized steel segment through its new project, the Nam Kim Phu My plant in the My Xuan B1-Dai Duong Industrial Zone (Ba Ria-Vung Tau). This plant is expected to have an annual capacity of 1.2 million tons and a total investment capital of 4,500 billion VND.At present, Nam Kim Steel operates three plants with a combined designed capacity of 1 million tons per year, specializing in producing cold-rolled steel, color-coated steel, galvanized steel and steel pipes. Upon completion of the new plant, the overall capacity of the entire system will more than double to reach 2.2 million tons per year.The construction of the new plant will commence in 2024 and span across three phases (each producing 400,000 tons) until the end of 2026. The new product will be galvanized steel used in household electrical appliances, requiring higher manufacturing technology than Nam Kim Steel’s current galvanized steel products, primarily used in construction.DSC believes this project will contribute to enhancing Nam Kim's competitiveness and revenue in the future by leveraging the advantage of low steel production costs domestically, thereby stabilizing profit margins.According to the business operations, Nam Kim Steel reported a revenue of 4,262.06 billion VND, a decrease of 3.7% compared to the same period. However, the after-tax profit recorded a gain of 23.66 billion VND compared to a loss of 418.69 billion VND in the same period, marking an increase of 442.35 billion VND. Notably, the gross profit margin shifted from a negative 3.6% to a positive 4.8%.Over the first nine months of 2023, Nam Kim Steel recorded a revenue of 14,136.76 billion VND, marking a 24.7% decrease compared to the same period, while the after-tax profit amounted to 109.74 billion VND, showing a 62.1% decrease from the corresponding period.It's known that in 2023, Nam Kim Steel set its business plan with a total revenue target of 20,000 billion VND, a 13.5% increase compared to the same period, and an estimated pre-tax profit of 400 billion VND compared to a loss of 106.91 billion VND in the same period, amounting to an additional 506.91 billion VND. Therefore, by the end of the first nine months of 2023, with a pre-tax profit of 146.97 billion VND, Nam Kim Steel had achieved 36.7% of the annual profit plan.