Despite sluggish performance driven by a fall in steel prices, experts are optimistic about the steel industry’s recovery in 2024 as the Government’s policies and the revised Land Law are put in place to support the realty market and the construction industry.
According to the Vietnam Steel Association (VSA), steel manufacturing output in September totaled nearly 2.34 million tonnes, up 2.41% month-on-month and down 4.2% year-on-year. Steel consumption was nearly 2.2 million tonnes, increasing 4.69% month-on-month, and 9.4% year-on-year.
The results were spurred by the Government’s policies to remove bottlenecks and bolster economic growth from January – September, including those accelerating the disbursement of public capital for transport infrastructure development.
With recovery in demand, steel enterprises have recorded sound production results. Consumption of construction steel, hot-rolled coil steel and steel billets of Hoa Phat Group reached 596,000 tonnes in September, rising 7% against the previous month. Meanwhile, Vietnam Steel Corporation sold 268,000 tonnes of steel in September, the highest amount recorded since the outset of this year.
However, the VSA said although public investment and the realty market are heating up, which will boost steel demand for the remainder of the year, it is not until Q1 of 2024 that the steel market will see strong recovery.
Vietnam’s steel industry has been in a downward spiral, with steel prices falling 19 times since the start of 2023. Prices have been hovering around VND13.5 million (US$548.56) per tonne, due to gloomy real estate market, slow public investment disbursement, and fierce competition from China.
According to the steel industry’s specialist Nguyen Van Sua, a slump in the realty market since the end of 2022 has driven steel demand down, while steel products imported from China at cheaper prices have created pressure on domestic steel prices.
In a bid to stabilise steel prices, it is necessary to accelerate the implementation of real estate and public investment projects, Sua said, adding that when the realty market becomes more vibrant, the steel market will heat up.
VNDirect Securities Corporation said that the steel industry will boom in 2024. The adoption of the amended Land Law will help remove financial bottlenecks for house buyers, throwing a charge into the real estate market.
Meanwhile, Director of Mercantile Exchange of Vietnam Pham Quang Anh believed that concerted efforts of the Government to promote the disbursement of public capital will stimulate demand and step up domestic business and production activities.
With robust signs from the realty and construction sectors, the steel market will recover soon, he added.