Lower steel export forces businesses to eye domestic market

Steel production in November was almost unchanged at 548,108 tonnes compared to the same period last year. —VNA/VNS Photo

Exports of HRC steel in November continued to be mired in gloom, so companies are being forced to return to the domestic market to increase consumption.

According to the Việt Nam Steel Association (VSA), total hot-rolled coil (HRC) consumption continued to decline sharply, especially exports. HRC steel sales in November decreased by about 18 per cent year-on-year to 499,000 tonnes. Of which, the steel exports plummeted by more than 70 per cent, to 101,000 tonnes.

However, steel production in November was almost unchanged at 548,108 tonnes compared to the same period last year.

In the first 11 months of this year, the HRC steel sales decreased by two per cent year on year to six million tonnes. Of which, the exports decreased by 31 per cent to 2.2 million tonnes.

The big fall in HRC exports was due to competition from Chinese rivals in the global market, the Vietnam Entrepreneur Magazine reported.

S&P Global cited data from the General Administration of Customs of the People's Republic of China showing that China's finished steel exports over January-November rose 22.6 per cent year-on-year to about 101.2 million tonnes.

Their lower domestic demand, due to the lack of recovery in the real estate sector, has forced Chinese steel producers to boost steel exports with cheaper prices to other countries.

In addition, Việt Nam is also under pressure from trade defensive measures across some major export markets. Vietnamese HRC steel has faced two investigations on imposing anti-dumping taxes in India and also in the EU markets.

The EU is the second largest export market for all kinds of steel from Việt Nam, accounting for 25 per cent of the total, while India ranks fifth, holding four per cent of the total export volume.

The difficulty in the export market has led local steel producers to find ways of boosting domestic sales.

HRC steel consumption in the domestic market in the first 11 months of this year reached nearly 3.9 million tonnes, an increase of 28 per cent over the same period last year.

In the first 11 months, galvanised steel production increased by 26 per cent year on year to 5.2 million tonnes, while sales surged by 33 per cent to more than five million tonnes. Steel pipe output rose by four per cent to 2.25 million tonnes.

According to the Việt Nam Steel Association (VSA), the domestic steel market recorded positive impacts from the demand for galvanised steel and construction steel to re-roof houses and repair structures damaged by recent storms.

In addition, Việt Nam also instigated anti-dumping measures against HRC steel imports from China and India, so the pressure of Chinese steel on the local market has begun to cool down.

November was the first month of this year to record a decrease of 20 per cent year-on-year in steel volumes imported from China to 876,000 tonnes.

Việt Nam only has two HRC steel producers with a maximum capacity of about 8 million tonnes in total, including 5 million from Formosa and 3 million from Hòa Phát.

The deputy director of stock analysis at SSI Research,

said that next year, the steel industry would benefit from the recovery cycle of the real estate industry and the major public investment projects.

In a recent report, Việt Nam Steel Corporation (VNSTEEL) also expected the domestic steel market to be more vibrant in the final months of this year.