Steel Enterprises "swim upstream”

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	Steel industry expected to recover in 2024
	Steel industry expected to recover in 2024

Steel businesses witnessed high consumption in September 2023. Photo: HSG

More recovery from September 2023

According to information from the Vietnam Steel Association (VSA), accumulated in the first 9 months of 2023, finished steel production reached nearly 20.2 million tons, down 13.3% over the same period in 2022. Finished steel consumption reached nearly 19 million tons, down 10.8% year on year, of which exports reached more than 5.96 million tons, up 22.6% over the same period last year. Consumption in September showed a clearer recovery with the highest output so far this year and was also the first month of the year to record growth over the same period. Specifically, according to VSA, in September, steel consumption of all types increased by 4.69% month on month and increased by 9.4% year on year.

VSA believes that the current economic context records a number of bright spots in terms of policies to remove difficulties and promote economic growth issued by the Government and ministries and branches, along with positive signals from the disbursement speed of public investment capital in the field of transport infrastructure. However, market demand for domestic steel products in general is still weak and has not improved much.

Amid socio- economic chaos, many steel industry enterprises still achieve positive business results and consumption.

According to the fourth quarter financial report of the fiscal year (FY) 2022-2023 (from July 1, 2023, to September 30, 2023) and cumulative fiscal year 2022-2023 (from October 1, 2022, to September 30, 2023), the profit after tax of Hoa Sen Group Joint Stock Company (HSG) recorded a positive improvement from a loss of VND 680 billion in the first quarter of the fiscal year 2022-2023 to a profit of VND 438 billion. In the fourth quarter of the fiscal year 2022-2023, from then on, for the entire fiscal year 2022-2023, HSG achieved a profit after tax of 28 billion VND.

To achieve this result, HSG said, the Company has simultaneously implemented many different measures such as lowering outstanding loans to reduce interest costs, more effectively managing financial costs and operating costs thanks to negotiating shipping rates and optimizing logistics operations to reduce shipping costs. At the same time, HSG has also completed carbon tracing on nearly 20 Hoa Sen Steel Sheet product lines, thereby helping to expand export routes to the European market.

Similarly, in the third quarter of 2023, the net profit of Hoa Phat Group Joint Stock Company (HPG) reached about 2,000 billion VND, significantly improved compared to the loss of 1,800 billion VND in the same period last year. The recovery in net profit was driven by improved sales volume, reduced input material costs and better inventory management. In particular, in terms of consumption output, thanks to expanding and developing new markets, positive export volume has been maintained even though demand in some developed markets shows signs of decline.

According to the latest information from Hoa Phat Group Joint Stock Company (HPG), this enterprise has reached the milestone of 8 million tons of HRC steel after more than 3 years since May 2020, which marked the birth of the first HRC roll. In September 2023, HPG sold 234,000 tons of HRC, while HRC's downstream products including steel pipes and galvanized steel sheets reached more than 48,000 tons and 20,000 tons, respectively, an increase of 20% and 75% compared to August.

As for Vietnam Steel Corporation (VNSteel), in September, the entire system achieved sales output of over 268,000 tons, consumption increased by 8% month on month and increased by 9% year on year. This month also recorded the highest output in 2023. Accumulated in the first 9 months of 2023, consumption of finished steel products of all types reached over 2 million tons, equal to 77% of the same period in 2022.

Positive expectations

According to surveys and estimates, the total profit of the entire steel industry on the stock exchange reached nearly 2,000 billion VND, 5 times higher than the previous quarter and increased sharply compared to the loss of 4,700 billion VND in the same period in 2022.

Although there is no momentum to turn losses into profits like HSG or HPG, many other steel industry enterprises have minimized their losses compared to the same period last year and the previous quarter. Although SMC Trading Investment Joint Stock Company maintained a net loss of 164 billion VND, in the third quarter of 2023, this was still lower than the loss of nearly 188 billion VND in the same period last year. However, in the accumulated 9 months, SMC still had a heavy loss of up to 550 billion VND, while in the same period in the same 9 months of 2022 lost 58 billion VND.

At Vietnam Steel Corporation (VNSteel), the company's third-quarter profit after tax lost nearly 171 billion VND, a loss of more than 404.6 billion VND compared to the same period last year. With Pomina Steel Joint Stock Company, the third quarter of 2023 recorded a loss of more than 110.4 billion VND, a sharp decrease compared to the loss of more than 715.6 billion VND in the third quarter of 2022...

Experts from SSI Securities Company commented that the development prospect for steel industry enterprises in 2024 is totally obvious thanks to demand recovery, especially in the second half of next year. Steel prices are stable thanks to the favorable correlation between regional supply and demand in the context of a recent decline in Chinese steel output and the profit margins of steel mills in both China and Vietnam are quite low. On the other hand, export channels may remain stable next year, especially since key markets are expected to grow slightly.

According to forecasts of the World Steel Association (WSA), global steel demand is forecast to reach a total of 1.81 billion tons in 2023 and increase to 1.85 billion tons in 2024. WSA said, interest High productivity and costs have negatively affected the construction industry. In ASEAN 5 (including Indonesia, Malaysia, Philippines, Thailand and Vietnam), according to WSA, steel demand will be driven by domestic demand and infrastructure investment despite inflation and other factors regardless of the worsening external factors. However, the region's export activities have slowed significantly and are reducing production efficiency.