Steel industry confident of maintaining growth momentum

VCN - With positive results in the first quarter, it is expected that the steel industry willto maintain its growth momentum until the end of the year, especially as there are large steel projects operating at full capacity.
tin nhap 20190416150748 Steel industry expected to stay upbeat in 2019
tin nhap 20190416150748 The steel industry has maintained its growth momentum
tin nhap 20190416150748 Does the US-China trade crisis affect Vietnamese steel companies?
tin nhap 20190416150748
The growth forecast of steel production in 2019 is about 10% compared to 2018. Photo: Tran Nghi.

Starting with convenience

According to the latest report from the Ministry of Industry and Trade, in March alone, compared to the same period in 2018, crude steel production was estimated at 1,684.3 thousand tons, up 56.4%; rolled steel is estimated at 506.7 thousand tons, up 13.5%; bar and angle steel is estimated at 522.9 thousand tons, up 0.6%. Generally, for the first 3 months of the year, production of crude steel and rolled steel increased by 64.8% and 6.1%, respectively, over the same period last year. Particularly, steel bar and angle steel decreased slightly by 0.5%.

From the perspective of enterprises, the "picture" of production and consumption of one of the "giants" in the Vietnamese steel industry is Hoa Phat Group, which also showed remarkable prosperity in the first months of the year. By the end of the first quarter, Hoa Phat Group brought nearly 700,000 tons of construction steel to the market, an increase of 28.68% compared to the first quarter of 2018. With increasing production, Hoa Phat Steel strengthens its leading position in the market with over 26%. Notably, consumption in the southern region increased 2.2 times compared to the first quarter of the previous year, while consumption in the central region also grew to 87%.

Mr. Dinh Quang Hieu - Hoa Phat Steel Sales Manager assessed: “This is a sign that Hoa Phat Steel has quickly acquired more market share after increasing output from the new steel rolling mill in the Hoa Phat Dung Quat iron and steel complex (Quang Ngai). In the export segment, Hoa Phat construction steel also recorded a slight increase compared to the same period in 2018. In the first quarter, there were over 77,000 tons of Hoa Phat steel exported, of which 59% of output went to Cambodia. In addition, the key products of Hoa Phat Group continue to be present in many markets such as the US, Japan, and Australia.”

Difficulties

The Ministry of Industry and Trade forecasts that the steel industry in 2019 is expected to have good growth, contributing positively to the overall growth of the economy. In particular, the Formosa Ha Tinh steel project in 2019 will put into operation two blast furnaces with a capacity of 7.5 million tons/year (about 4.5 million tons in 2018). In addition, the Hoa Phat Dung Quat Iron and Steel Complex is expected to go into production (No.1 blast furnace from June 2019, No.2 from September 2019 and No.3 from December 2019). If it is mobilized at full capacity, it will produce about 2 million tons of steel. On the basis of the above analysis, the Ministry of Industry and Trade expects the growth of steel production in 2019 to be about 10% compared to 2018.

Hoa Phat Group this year aims to achieve VND70,000 billion in revenue and VND6,700 billion in after-tax profit. The revenue is an increase of 20% compared to 2018, but profit is expected to decrease. Talking about this, Chairman of Hoa Phat Group Tran Dinh Long said revenue of 2019 is expected to increase by more than 20% compared to 2018 by bringing the first phase - the project of Hoa Phat Dung Quat Iron and Steel Complex, Color coated galvanized steel sheet lines are in operation and gradually increase in scale from agricultural products.

Speaking in more detail about the progress of the Hoa Phat Dung Quat Iron and Steel Complex project, according to Mr Long, the Group has stably operated the first construction steel rolling line with a capacity of 600,000 tons from the fourth quarter of 2018. The first blast furnace is expected to produce the first batch of iron on June 18, 2019 and every four months after that will complete the next blast furnace. All items of basic construction, equipment installation of both phases are being controlled according to the set schedule, striving to complete both phases in the second quarter of 2020. "Up to this point, Hoa Phat has recruited 5,500 personnel for the project, training practical operations in Hai Duong to serve the process of building and operating the Complex in Quang Ngai," Mr. Long said.

However, besides the favorable factors, according to Mr. Long, 2019 is also a year of many challenges for the steel industry when raw material prices tend to rise; the projects that have been put into operation have not run enough capacity; and expenses have increased due to tight credit policies. Of which, the biggest objective reason for the reduction of Hoa Phat Group's profit plan was due to high iron ore prices from 64 - 65 USD/ton to 85-90 USD/ton.

In addition to production issues, many experts believe that one of the outstanding difficulties that the steel industry has been facing are trade defense lawsuits. According to the Department of Trade Defense (Ministry of Industry and Trade), up to now, steel products have been subjected to 47 anti-dumping and subsidy investigations, accounting for one third of the total number of trade defense investigations. Of which, there were 13 cases in 2018. Since the beginning of 2019, there have been two new investigations for Vietnam – India investigated galvanized flat rolled steel and Indonesia investigated alloy flat steel products.

Ms Pham Chau Giang, Deputy Director of the Trade Protection Department, said steel is being constantly caught in trade defense lawsuits because it is a basic product of many countries and considered a national security issue. Besides, there is oversupply around the world as well as the global economy is tending to slow down, leading to many steel companies of the countries encountering losses. In addition, this problem also stems from the trend of protectionism that is returning.

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In order to overcome difficulties and keep the growth rate, Mr. Nguyen Van Sua, Vice Chairman of Vietnam Steel Association, recommended that Vietnamese steel enterprises must improve product quality as well as competitiveness to reach overseas markets, while they should raise their awareness about international trade, avoiding possible risks. "I think that export enterprises also need to research and arrange export markets reasonably, avoiding focusing on a few markets that cause sudden increases in exports, creating an excuse for importing countries to initiate trade defense investigations," Mr. Sua said.

By Thanh Nguyen/Quynh lan

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