Steel enterprises look for "promising partners" from exports

VCN - The decline in demand in many markets around the world has made the steel industry business picture "gloomy", in which export activities are also affected
Vietnamese steel enterprises are still offered many export opportunities in the last months of the year. Photo: ST
Vietnamese steel enterprises are still offered many export opportunities in the last months of the year. Photo: ST

The trade deficit of more than 2.2 million tons of steel

Data from the Vietnam Steel Association (VSA) shows that finished steel production in the first eight months of 2022 reached 20.808 million tons, down 5.8% over the same period in 2021. Finished steel sales reached 19,261 million tons, down 1.6% over the same period in 2021. Of which, exports (exports) reached 4,562 million tons, down 7.4% over the same period last year. According to data from the General Department of Customs, in August alone, Vietnam had a trade deficit of 272,000 tons of iron and steel of all kinds, bringing the total trade deficit in 8 months to more than 2.2 million tons, in contrast to the same period in 2021 with a trade surplus of nearly 330,000 tons.

According to the Commodity Exchange of Vietnam (MXV), significant economies in the world are tightening their currencies to curb escalating inflation. As a result, Vietnam faced a double whammy of goods demand decrease in general and steel consumption volume decline in particular. Meanwhile, the steel industry can only meet construction needs but cannot provide enough for others, such as manufacturing, processing, mechanical engineering or supporting industries.

However, in terms of exports, according to experts and businesses, there are still many opportunities available for Vietnamese steel businesses in the last months of the year, thanks to the dissolution of factories in Europe (EU) due to energy cost rise. In particular, Vietnam's steel industry can benefit from the tension between Russia and the EU. Viet Rong Securities Company (VDSC) said that the EU's ban on Russian oil imports, applied in December, will aggravate the electricity shortage in the region. In addition, the EU will need time to find alternative energy sources, so cheaper steel supplies in Asia will become more attractive when EU steel demand recovers.

In addition, according to many forecasts, steel prices are showing signs of recovery due to increased storage demand and positive recovery signs of some steel mills in China, enabling businesses to earn higher profits.

Look for opportunities

Vietnamese steel enterprises are also promoting export activities to the EU market using the Free Trade Agreement between Vietnam and the EU (EVFTA). As a result, if at the time of June 2020, steel exports to the EU market only accounted for 3.4% of the total steel export turnover, this figure after two years has increased to 20.51%, corresponding to an increase of more than six times. According to VSA, the EU market currently accounts for nearly 18% of the total export volume of domestic steel enterprises, just behind the markets in ASEAN countries and the US.

By taking advantage of these advantages, the export situation of many enterprises is still favourable. Hoa Phat Group recently said that the export of pre-stressing strand (PC Bar and PC Strand) has reached 22,000 tons, up 54% yearly. The total output of pre-stressed and wire-drawn steels of Hoa Phat Metal Fabrication Company reached more than 92,000 tons, up 3% over the same period. Exports contributed up to 40% with more than 36,500 tons. At the end of September 2022, Hoa Phat announced that it would put PC Strand line No. 2 at the post-stressed steel factory (Dung Quat Economic Zone - Quang Ngai) to double its output in 2021. As a result, the market Export of Hoa Phat steel has expanded to 25 countries.

At Hoa Sen Group, exports are also being actively expanded to more than 87 countries and territories, with product quality meeting international standards and export output of over 100,000 tons/ month. Nam Kim Steel also expects to maintain its beneficiary from the trend of boosting steel output imported into the EU, in the context that the EU's steel output in July decreased by 6.7% over the same period. Nam Kim's main export markets include Europe (accounting for 50% of export volume), the US (20% of export volume) and other ASEAN countries...

However, export steel enterprises are still challenged. According to VDSC, the trade policies of major markets are changing in a negative direction for Vietnam. In particular, the EU market tightens protection measures for Vietnamese coated steel. As a result, from July 1, 2022, to June 30, 2024, Vietnam's metal-coated steel sheet (group 4A) is managed according to quotas.

Besides, as reflected by enterprises, the steel industry is still facing difficulties in rising raw material prices, transportation charges up to 30%, banks tightening lending policies. Therefore, many businesses and enterprises are struggling to find alternative sources of raw materials, innovate technology, improve quality, diversify markets or reduce operations to avoid losses. In addition, according to experts, steel enterprises should take advantage of opportunities from moves to promote public investment in the domestic market.

By Hương Dịu/ Thu Phuong

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