Steel industry - difficult to husband

Slow output

 

Right in the first weeks of December, a series of steel brands such as Viet Y, Viet Duc, VAS... all adjusted to increase the price of steel products, with an increase ranging from 200 - 310 VND/kg. Recently, VAS steel increased prices with two of its products, including CB240 coil, which increased by 310 VND/kg, to 14,620 VND/kg; Rebar D10 CB300 increased by 200 VND/kg, priced at 14,820 VND/kg. Or Tung Ho steel, with CB240 steel coil increased by 300 VND/kg, to 14,510 VND/kg; Rebar D10 CB300 increased by 310 VND/kg, priced at 14,770 VND/kg.

 

Explaining this adjustment, a representative of Viet Duc Steel Production Joint Stock Company said that although the company has made great efforts to stabilize the selling price in the market, the price of steel billets and raw materials continued to increase. Therefore, in order to ensure product prices are consistent with input costs, enterprises had to increase the rebar types of the factory.

 

Thus, after 2021 with many advantages, from the second and third quarter of 2022, the steel industry begins to enter a downward cycle in the context of an increase in input material prices but a decrease in steel prices, plus the impact of interest rate increases, exchange rate difference... caused the business results of most businesses to drop sharply, even at a loss.

 

For example, the latest report on production and business situation of Hoa Phat Group (HPG) said that in November 2022, the enterprise produced 384,000 tons of crude steel, a sharp decrease of 43% compared to the same period in 2021. steel products also only reached 443,000 tons, down 30% over the same period last year. Hoa Phat's representative said that the domestic and foreign market demand for steel products in general has not been improved. This is the main reason leading to Hoa Phat's total consumption falling to the lowest level since the beginning of the year.

 

Accumulated in 11 months, Hoa Phat has produced 7 million tons of crude steel, down 6% compared to the same period in 2021. Consumption of construction steel, billet, HRC reached more than 6.6 million tons, together down 6%. weak due to no export orders of billet as last year.

As for agents, although it is the year-end construction season, the slump is still lingering, the purchasing power is low because construction and real estate projects have slowed down and are difficult to deploy. Mr. Nguyen Thanh, owner of a distribution agent on La Thanh street (Dong Da district) said that before the low steel price was difficult to sell, now it continues to increase the price, people only ask, not buy. "Domestic steel is mainly consumed by projects. But now it's still frozen when the market has difficulties in terms of capital, liquidity, credit... making my warehouse packed with all kinds of steel" - Mr. Thanh said. .

 

Can't recover soon

 

In the recent steel industry outlook report, Rong Viet Securities Company (VDSC) said that the steel industry has little chance of recovering in 2023 due to still weak consumption and pressure on exchange rates and interest rates on costs. financial fees. In 2023, the Government promotes investment in infrastructure projects with the goal of ensuring economic growth that can support domestic steel demand, especially for construction steel. However, the real estate industry, after a quiet 2022, is not expected to recover in 2023, so it is difficult to support domestic steel demand to increase again.

 

In this regard, construction materials expert, Master Pham Ngoc Trung, said that the promotion of public investment disbursement and the recent loosening of credit room by banks can be understood as a lifesaving solution for the whole industry. construction materials in general, steel industry in particular. However, weak businesses will find it difficult to get credit.

 

Sharing the same opinion, Dr. Pham Chi Quang - Director of the Monetary Policy Department - State Bank of Vietnam said that the State Bank has loosened 1.5 - 2% on the target of 14% for credit growth for the whole year. will reach over 15.5 - 16%. Although the demand for capital is very large, but credit institutions are also businesses, must lend on specific terms and conditions, cannot lower the standard of lending to businesses that are losing money when the money mobilized is from the people. "In this context, commercial banks must also light a torch to find good businesses, not only one bank but many banks of the same credit limit, maintaining credit relations," said Mr. Pham Chi Quang.

 

Certainly, the State will never refuse to support enterprises in the building materials industry to continue their production and business activities, but how and how much support is an issue that needs to be considered carefully, because the source force is finite.