Vietnamese fisheries, rubber, steel exporters may benefit from China economic stimulus: analysts

Vietnamese exporters of seafood, rubber and steel could benefit from China's newly launched economic stimulus package, analysts say.

China’s central bank unveiled a slew of measures to boost the world’s second-largest economy last week, including a combination of rate cuts, reserve requirement ratio (RRR) cuts and structural monetary policies.

Given that China is Vietnam’s largest trading partner and second-biggest export market, a possible recovery in Chinese domestic demand driven by the new stimulus package could benefit Vietnamese exporters of key commodities, say analysts with Yuanta Securities.

In sync, their peers with Aribank Securities (Agriseco) predict that local rubber and fisheries exporters could be major beneficiaries.

Fisheries exports to China jumped 17% year-on-year to $1 billion in the first eight months of this year, according to the customs department.

The Vietnam Association of Seafood Exporters and Producers (VASEP) anticipates the upward trend to continue for the rest of this year, rising even further during the Lunar New Year season.

Doan Chi Thien, a board member of Navico – the largest pangasius exporter in the Mekong Delta province of An Giang – says shipments to China have increased since the third quarter thanks to competitive prices and product quality.

He says the company expects robust year-on-year growth in export volume and prices as China’s stimulus policies take effect.

Nguyen Van Hung, CEO of a shrimp exporting company, also says shipments to China have experienced double-digit growth, driven by favorable policies and rising demand.

Another sector projected to benefit from China’s aggressive stimulus is rubber. The recovery of China’s manufacturing sector, especially automobile production, could also have a positive impact on Vietnam’s steel exports, analysts say.

In fact, steel exporters may see indirect benefits from China’s economic stimulus package, they add.

They note that a sluggish property market has meant that domestic demand for steel in China has remained low, prompting Chinese steelmakers to increase exports, leading to price reductions and heightened competition.

Meanwhile, steel is the fifth most-imported commodity by Vietnam from China. Between January and August, Vietnam imported over $4.7 billion worth of steel from China, a 44% year-on-year increase. In August, the prices of construction steel and hot-rolled coil steel fell by 24% and 21%, respectively, according to MB Securities.

A deputy director of a steel company has noted that China’s real estate support policies and its massive credit packages are likely to stimulate the property sector, which could lead to an increase in domestic demand. This may ease the pressure on Chinese steelmakers to offload excess steel in foreign markets, including Vietnam.

Agriseco analysts say that the prices of certain input materials may decline as Chinese production picks up pace. According to the General Department of Vietnam Customs, raw materials for the textile and footwear industries rank third among Vietnam’s top five imports from China, totaling nearly $10.2 billion over the past eight months.

Other analysts note that in the footwear industry, imported materials account for approximately 48-50% of total production costs. Therefore, any reduction in these costs would enhance the competitiveness of local footwear manufacturers, especially given the challenges the industry has faced in the first half of this year.