Vietnam steel market overall 2022 and opportunities in 2023

Vietnam steel market overall 2022 and opportunities in 2023

Steel NewsDate: 07-06-2023 by: Ngan Le

The Vietnam steel market is going through a difficult period when steel prices have been adjusted along with an decrease in demand. Specifically, SSI Research has forecast that steel industry demand in the first half of 2023 may decline in the context of a weakening real estate market and tight monetary policy of the government.

1. Vietnam steel market fluctuations

According to the assessment from VSA, 2022 is a challenging year when the decline in the domestic consumption market has affected the price of steel, and the cost of production materials is also complicated. Those changes lead to many steel enterprises falling into predicament and loss.


Specifically, Hoa Phat Group Joint Stock Company achieved a revenue of VND 142,000 billion, down 5% compared to 2021. In terms of output, Hoa Phat has supplied the market with 7.2 million tons of steel (including billet, steel) construction, hot rolled coil), the result is down 7% compared to 2021.

Not only Hoa Phat faced difficulties, but also other giant enterprises in the steel industry also struggled because of declining revenue. Vietnam Steel Corporation - VNSteel recorded revenue of VND 38,732 billion, down 5% compared to the previous year of 2021.

2. Main Challenges For Vietnam Steel Industry

Based on the assessment of many experts, the biggest reason for the decline comes from the large fluctuation in steel price while the consumption demand is not very positive.

2.1 Impact from real estate & global inflationary

The domestic real estate market has shown signs of weakness for a long time, it caused a heavy blow to the demand of using steel as well as prices. Domestic raw materials still cannot avoid undering the pressure from global inflation, specifically the price of petrol and raw materials such as iron and steel has increased rapidly in the Vietnam market since the recovery of the Covid pandemic.


2.2 Consequence of Russia & Ukraine conflict

In addition to the above issues, indirect factors related to the conflict between Russia and Ukraine cannot be ignored. Specifically, Russia is one of the world's largest in supplying coal, the dispute between the two countries has disrupted coal supply. Coal prices have increased many times when compared to the normal level, which has led to an increase in the general price of input materials for production.


Unusual disparity of Russia's coal exporting volume to the Asia countries

2.3 China’s “Zero-Covid” Policy Affect to Vietnam Steel Market

Besides that, China's zero covid policy also affects the domestic steel industry and raw material prices. Until now, China has always been the main export market of many domestic enterprises, so the tightening policies at the border gate have delayed many carrying trade and disrupted the transport cycle between the two countries. As a result of this delay, transportation costs have increased, which has led to an increase in the prices of raw materials.

3. Prospects for Vietnam Steel Market

In the face of these factors, the Vietnam steel market will inevitably face difficulties, but potential opportunities are still open to all businesses.

Although the export situation is not very positive, the import of input materials for steel production has always remained stable when it only decreased slightly by 8% when compared to the same period last year. According to the most recent statistics, Vietnam's crude steel production capacity reaches 23 million tons/year, particularly hot-rolled coil (HRC) reaches 7-8 million tons/year. Vietnamese steel enterprises, in particular Hoa Phat Group, have invested in building large iron and steel factory complexes.


Vietnam's ranking on crude steel production among countries

It can be seen that Vietnam's steel industry is gradually becoming self-sufficient in input steel materials and they are not much dependent on foreign countries. The Vietnam steel market has had a strong development in steel production capacity and technology in recent years.

Moreover, experts of finance show high expectations on the recovery of steel prices in 2023. The driving force of this expectation mainly comes from China's stimulus policy of the real estate market. This policy of China will dismantle difficulties for many businesses in the Vietnam steel market because China has always been an important export market for Vietnam.