The Steel Industry at the Threshold of Recovery
Steel NewsDate: 11-12-2023 by: Nhu Quynh
The steel industry in Vietnam and globally is showing positive signs, forecasting a resurgence in a new cycle for the steel sector. With the increasing demand for steel, the market anticipates a significant acceleration in business outcomes next year.
The general situation of the global steel industry
With the global economy continuing to decline under the strain of tightened monetary conditions impacting the world economy at large and the steel industry in particular, steel production slowdowns are evident in several key markets such as Japan, South Korea, Russia and others. While there's a prevailing trend of decline in the market, there are still discernible signs of recovery. In the first nine months of 2023, global crude steel production reached 1.4 billion tons, marking a 0.1% increase compared to the same period in 2022. This uptick serves as a bright spot, indicating a gradual resurgence in the steel industry.
With its consistent dominance, accounting for over 50% of the annual global steel production, China's steel industry significantly influences the worldwide steel sector. Even steel prices within China's domestic market have a profound impact on the global steel market. Historical data also indicates that steel prices in Vietnam tend to exhibit quite similar fluctuations, sometimes responding at a slower pace compared to the fluctuations seen in Chinese steel prices.
With Chinese steel prices nearly hitting their lowest levels in 2017 and showing signs of recovery in the third quarter of 2023, thanks to favorable export markets, there's an anticipation for a positive impact on the overall global steel price landscape. This also suggests a potential resurgence in demand in the largest steel markets among developed nations, including the Vietnamese steel industry.
The Vietnamese steel industry is on the verge of recovery
In Vietnam's market specifically, the steel industry anticipates a robust resurgence as the real estate market revives from 2024 onwards. Simultaneously, the government is vigorously expediting public investment disbursement on the largest scale ever seen. Most key national projects have commenced this year, indicating that the period from 2024 to 2026 will witness a dense construction phase, generating substantial demand for steel.
The demand for steel has somewhat improved in the latter months of the year. In fact, several steel industry enterprises are experiencing positive business outcomes and substantial consumption. According to the financial report for Q3/2023 from Hoa Phat Group Joint Stock Company, their net profit reached approximately 2,000 billion VND, a significant improvement from the loss of 1,800 billion VND in the same period last year. The recovery in net profit is attributed to enhanced sales volume, reduced input material costs, and improved inventory management.
According to assessments by multiple financial organizations, in the upcoming recovery phase of the steel industry cycle, Hoa Phat Group Joint Stock Company is expected to be the largest and first beneficiary due to its advantages in scale, dominant market share in various product segments, as well as its strong financial capacity.
