The Vietnamese steel industry is forecasted to grow by 10% in 2024
Steel NewsDate: 22-01-2024 by: Nhu Quynh
With positive developments in consumption output in the final months of 2023, the Vietnam Steel Association (VSA) recently forecasted that the steel industry this year may increase by 10%, driven by expectations of global steel demand recovery.
The steel industry and the positive signals
The strong recovery of the steel industry this year is established against the backdrop of negative impacts from macroeconomic conditions and the 'freeze' of the real estate market in 2023. In the upcoming year, the steel industry is forecasted to experience significant growth, leading to the recovery of profits for businesses within the sector.
As we step into 2024, the internal economy displays indications of recovery, bolstered by governmental and sector-specific policies that encourage public investment. It is anticipated that the steel industry in 2024 will witness a growth of 6.4%, reaching nearly 21.6 million tons.
Not only in the domestic market, but the volume of Vietnam's steel exports is expected to sustain growth due to the increasing global demand for steel. Accordingly, the export of finished steel and semi-finished products is projected to rise by 12%, reaching nearly 13 million tons. This target is set based on the expectation that Vietnam's GDP will grow by 6–6.5% this year. The increased consumption of the steel industry is largely attributed to the signs of recovery in the real estate market in the fourth quarter of 2023 and real estate projects are expected to boost sales in 2024.
The steel industry relies on the market's recovery
At present, the economy has recorded some bright spots regarding policies to remove difficulties, promote public investment and stimulate economic growth issued by the government and various ministries. Accordingly, the Vietnam Steel Association (VSA) also forecasts that the prospects for Vietnam's steel production may increase by about 10% in 2024 and 8% in 2025 as the demand for steel from domestic economic sectors recovers.
The forecast for the production of finished steel in the period 2024–2025 is expected to reach approximately 28–30 million tons, with domestic steel consumption ranging from 21-22.5 million tons. The primary drivers for steel consumption stem from the gradual recovery of the real estate market. The government and various ministries are actively investing in and developing infrastructure and implementing public projects. This concerted effort is poised to revitalize the domestic steel industry, leading to a surge in profits for steel manufacturers after a prolonged period of losses and inventory challenges.
Although actual steel consumption by end consumers has not fully recovered as anticipated, the price surge at the beginning of 2024 was predicted by steel industry experts since the end of 2023, when production material costs continuously increased for several weeks. With the momentum of the recovery, steel prices are forecast to continue rising before the Lunar New Year, possibly surpassing the 15 million VND per ton mark.
Therefore, all enterprises in the steel industry expect the government, as well as relevant ministries and departments, to implement stronger policies to support the real estate market and promote the development of the steel market in 2024.