The Steel Industry is Expected to Recover

The Steel Industry is Expected to Recover

Steel NewsDate: 23-03-2024 by: Nhu Quynh

The year 2024 is expected to mark the recovery of the steel industry. Efforts to increase the disbursement of public investment capital along with promoting credit loan packages for social housing projects can have a positive impact on the steel market.

Pressure from cheap Chinese steel

After COVID-19, China gradually reopened to recover the economy. Being the country with the most developed steel industry in the world, however, the persistent situation of the real estate crisis also makes the business activities of this country's steel industry not very positive. Weak demand in the Chinese steel market in the context of the country's slowing economic growth, the real estate market not yet recovering, the electric vehicle manufacturing sector showing signs of oversupply, making steel products China continues to be exported at low prices to reduce inventory. This is a factor that puts great pressure on Vietnam's steel industry.


Previously, in 2023, China exported 91.2 million tons of steel, an increase of 35% compared to 2022. China exports steel mainly to Southeast Asian countries such as Indonesia, Thailand, the Philippines, Vietnam, etc., which also puts more competitive pressure on Vietnamese businesses because these have been the main export markets of the Vietnamese steel industry for many years. China's promotion of exports has led to a decrease in steel prices, causing the gross profit margin of many Vietnamese steel manufacturing enterprises to recover more slowly than expected.

The steel industry is expected to recover

In 2024, along with the recovery of the steel industry market, profit margins of steel manufacturing enterprises will improve after a long period of suffering losses and inventory.

According to a recent report from the Vietnam Steel Association (VSA), Vietnam's economy will have positive bright spots in 2023 when growth is promoted, inflation is controlled, and major balances of the economy are guaranteed. However, due to the impact of the world economic downturn, in 2023, the finished steel products of Vietnamese steel industry enterprises will only reach 27.76 million tons, down 5%. Consumption of finished steel products will reach nearly 26.3 million tons, down 3.5% compared to 2022. However, exports are a bright spot with significant growth, reaching 8 million tons, up 29% over the year. Previously, with the main export markets in the ASEAN region, EU, United States, and India,...

VSA also said that it is expected that in 2024, steel industry consumption will increase by about 6.4% and steel exports will increase to nearly 13 million tons. This target is set based on the expectation that Vietnam's GDP will grow by 6 - 6.5% this year. In addition, world steel demand is expected to increase by 1.9%, reaching 1.8 billion tons in 2024, of which ASEAN steel demand is expected to increase by 5.2%. VSA said that the steel production prospects of Vietnam's steel industry will increase by about 10% in 2024 and 8% in 2025 when the demand for steel in domestic economic sectors recovers. Finished steel product production in 2024 and 2025 is estimated to reach about 28 million - 30 million tons; domestic steel consumption demand is about 22 million - 23 million tons.

The business picture of steel industry enterprises has passed the gloomy period when steel prices showed signs of recovery. Businesses do not have to set up large inventories like last year. Profits of steel enterprises are gradually improving thanks to increased steel consumption and exports and reduced inventories at enterprises. With the government's economic promotion programs, including removing difficulties in the real estate sector, supporting interest rates, promoting public investment, etc., Mr. Nghiem Xuan Da, General Director of Steel Corporation Vietnam (JSC), forecasts that steel industry output in 2024 could increase by 10%.

Expecting the real estate market to recover in the second half of 2024, creating demand for the steel industry, Hoa Phat plans to increase steel output by more than 10% this year. In addition, this enterprise also invests in new projects to continue to strengthen its position as the leading steel manufacturer in Southeast Asia.