Vietnam
English2023 has started with a promising future for the Vietnamese steel industry. Domestic steel and iron prices have been recouping in the past two months. In spite of this positive start, the steel industry is yet to face another potential market challenge.
Global steel industry regains development drive
India’s steel is becoming in demand in the recent months which is a big threat to the other manufacturers. Its construction economy is escalating significantly. World Steel predicted that India’s steel demand will grow by 6.7% which is equivalent to 120 million tons in 2023, the highest growth rate among the major steel producers. As infrastructure spending soars, the probability of this to reach 200 million tons by the end of 2023 is feasible.
Aside from this, China started the year with a kickstart in the steel industry. China’s hot rolled steel price hit 4,138 RMB per ton, 11% higher than its record in early November. Despite some short-term demand pressure due to the pandemic, the Chinese government has been pushing factories to ramp up production. With China’s rebound and India’s rise, Vietnam’s steel market will face more challenges this year. However, Vietnam still has high opportunities to export construction steel and iron.
Opportunities for the Vietnamese steel industry
The steel business is highly cyclical, thus early forecast of supply and consumption is needed
The government’s strong support for public investment and constantly rolling out of construction projects are positive signs for the recovery and growth of steel businesses in 2023.
Iron ore, a key raw material for steel production, has bounced back strongly after hitting a three-year low in late October 2022. In the last two months, iron ore prices have risen by 36%, mainly driven by investors’ expectations of China’s recovery as the world’s largest steel consumer.
The latest projection by the World Steel Association also stated that global steel demand would see a modest recovery in 2023 at +1% [1.8 billion tons], after downturn by 2.3% in 2022 [1.79 billion tons]. The moderate rise of steel prices became more evident in December 2022.
Domestic demand for steel has increased but has not really prospered
According to VSA's statistics, in February, the situation of steel production and consumption increased again compared to January but still not prospering compared to the same period last year. Public investment will partly support domestic steel consumption, the government promotes investment in infrastructure projects with the goal of ensuring economic growth that can support domestic steel demand. Steel prices tend to slightly increase and China reopens are positive signs for the domestic steel industry from now to the middle of the year.
The steel industry may still see positive prospects amid challenges and changes in the steel market as construction demand will persist. Production and export of construction steel are Vietnam’s main strengths. This may be a good chance for the domestic steel industry to find new potential trade partners internationally.
Sources: Vietnamnet, Vneconomy
