Retail steel prices hit record low in nearly 2 years
Retail steel prices in Vietnam dropped Wednesday to around VND14 million ($572) per ton, equivalent to the level at end-2020.
Within more than one month, Hoa Phat Group's steel has decreased by VND1.2-1.3 million ($53) per ton. Hoa Phat, listed on the Ho Chi Minh City Stock Exchange as HPG, is among the largest steel companies in Vietnam by market value.
The same reduction margin was also recorded at other brands like Vietnam-Italy Steel, Vietnam Germany Steel Pipe, Kyoei Steel Vietnam, and Vietnam-Japan Steel.
In August, retail steel prices in Vietnam fell by about VND4 million ($171) per ton since May 11 in 12 consecutive drops.
The country's steel prices have dropped sharply due to the decline in the world price of steel billets and input materials. Prices of steel production materials like iron ore, scrap steel, and coke at the end of the second quarter were down 40-50% compared to the previous quarter.
Besides, demand among local construction companies has declined, while steel supply is abundant and inventories high.
According to the Vietnam Steel Association (VSA), domestic demand for steel is at a low level and exports have fallen sharply as Vietnam's prices are higher than regional peers'.
In September, construction steel output recovered, reaching 1,095,745 tons, up 11.91% over the previous month and up 47.2% year-on-year.
However, sales volume reached only 920,248 tons, down 21.91% from August and up 7.8% year-on-year. Construction steel exports reached 113,158 tons, down 47.9% year-on-year.
Analysts of Steel Online, a steel distribution agent of many big brands in Vietnam, said the price of steel fluctuates strongly for many reasons. Previously, steel prices increased due to the increased price of scrap, gasoline and coal along with high demand.
In addition, the market also faces disruptions in global raw material supply and supply chains, while China restricts production due to environmental problems.
Steel prices have dropped again because the world's macro-economy is in recession, as monetary policy and other economic-political conditions fluctuate.
A representative of Steel Online said domestic demand is poor and will remain very poor in the future. "The current export situation is also slower than the same period last year."
The return of steel prices to the level suitable for the economy will help stabilize investment performance, avoid damage to contractors and stimulate construction investment. But due to cash shortage and the State Bank of Vietnam's credit tightening, the real estate sector is facing difficulties, impacting the steel industry.
Regarding the prospect of the steel industry in the second half of the year, Vietcombank Securities (VCBS) said it has not seen any positive signals. VCBS predicts that Chinese steel prices would remain at the current low level in H2 because demand has not recovered.
Meanwhile, steel producers need to release a large amount of inventories and the sharp drop in raw material and fuel prices in H2 will continue to support the selling price reduction process.
In Vietnam, the situation is similar due to the pressure to reduce prices according to world market prices. The demand for domestic steel consumption dropped sharply in Q2/2022, prompting manufacturers to lower their selling prices to quickly release inventories.
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