Steel rods made by the Vietnam-German Steel Pipe JSC are used in traffic infrastructure constructions in the country. (Photo: VNA)Hanoi (VNA) – Vietnam’s listed steel companies canachieve higher growth in 2017 despite a volatile and predictable internationalmarket if they optimise operations and exploit missing links in the sector’ssupply chain, experts said on March 13.
Given recent international developments, global markets are likely to exhibitsome signs of volatility and instability, Dang Tran Hai Dang, deputy head ofmarket research at the Vietinbank Securities Company, said at a conference heldin Hanoi.
He said factors that investors and steel companies should pay attention toinclude uncertain US policies under the Trump administration, the slowdown ofChina’s economy and the Britain’s exit from the European Union.
These factors indicate unclear prospects for the global economy this year, hesaid, citing a report of the International Monetary Fund (IMF) that hasforecast global economic growth this year at just 3.4 percent.
The Vietnamese economy will also face a lot of challenges when the US Fedraises its lending rates, putting pressure on the Vietnamese dong to depreciateso as to make local products more competitive, Dang said.
In addition, Brexit and the US’s withdrawal from the Trans Pacific Partnership(TPP) are likely to negatively impact Vietnam’s exports, he added.
Nguyen Van Sua, Vice Chairman of the Vietnam Steel Association, said that theglobal steel industry has been through ups and downs since the middle of the20th century, as can be seen by growth rates in different periods.
The industry’s annual growth rate was 5.1-7.4 percent during 1950-1970, 0.5-2.5percent in 1970-2000; 6.2 percent in 2000-2005; 4.5 percent in 2005-2010; 2.5percent in 2010-2015; and 2.9 percent in 2015.
In 2016, the global steel sector saw a slight recovery but there was still asurplus in the market with the production reaching nearly 1.63 million tonnes,a year-on-year increase of 0.5 percent, compared to a consumption volume of 1.5million tonnes.
China was the top producer with 808.4 million tonnes, ahead of other countrieslike Japan, India and the US.
Sua said that one of the main reasons that helped China’s steel products becomemore competitive was preferential tax policies designed to boost exportvolumes.
He said Vietnam’s steel producers have not optimised their production capacityand have not met the market’s demand for some products like hot-rolled coilsteel, leading to the strong increase in steel and steel product imports. In2016, total steel imports rose 25 percent year-on-year to 17.5 million tonnes.
Despite all the challenges, there are still positive signs for the prospects ofthe steel sector and steel companies’ shares in 2017, Sua said.
There are plenty of opportunities for local steel companies if they can apply aclosed production system to reach maximum production capacity, reduceproduction costs and assure high product quality to make their products morecompetitive.
They should also explore missing links in the sector’s value chain to reducethe volume of imported steel products, and diversify their product base, hesaid.
In general, listed steel companies have recovered after 2015, with profitsgrowing 70 to 130 percent.
Hoa Phat Group and Hoa Sen Group are the two companies that have the topprofitability ratio, while Nam Kim Steel JSC and SMC Investment Trading JSChave the highest returns-on-equity (ROE) ratios.
Listed steel companies had a robust year in 2016 with increasing combinedmarginal profits and net profits.
Some of the listed firms recorded outstanding profit growth, like the Hoa PhatGroup (89 percent), Hoa Sen Group (131 percent) and Nam Kim Steel JSC (312 percent).
In 2017, Vietnam will see more foreign capital flowing in as the country is oneof the top 10 fastest growing securities markets in the world, the conferenceheard.
On March 8 this year, the VN Index reached a nine-year high of 716.6 pointswith a market average profitability rate of 18-20 percent. The benchmark indexhas gained more than seven percent since the beginning of the year with totalmarket capitalisation of 72 billion USD, an increase of 26.6 percent year onyear.
Investors will also be attracted by the Government’s efforts to divest fromState-own enterprises and put those companies on the stock market, as also thelow market price-to-earnings (P/E) ratio.
Vietnam’s steel producers and traders will integrate deeper in the globalindustry, especially given that the Government has signed 12 free tradeagreements and is negotiating four others, Sua said.
He said that there was still room for local steel companies to grow as Vietnam stillhas a huge demand for their products to develop its economy and infrastructure.
He forecast that the total volume of steel and steel products produced in thecountry will reach 50 million tonnes by 2020 and 73 million tonnes by 2025.-VNA
Given recent international developments, global markets are likely to exhibitsome signs of volatility and instability, Dang Tran Hai Dang, deputy head ofmarket research at the Vietinbank Securities Company, said at a conference heldin Hanoi.
He said factors that investors and steel companies should pay attention toinclude uncertain US policies under the Trump administration, the slowdown ofChina’s economy and the Britain’s exit from the European Union.
These factors indicate unclear prospects for the global economy this year, hesaid, citing a report of the International Monetary Fund (IMF) that hasforecast global economic growth this year at just 3.4 percent.
The Vietnamese economy will also face a lot of challenges when the US Fedraises its lending rates, putting pressure on the Vietnamese dong to depreciateso as to make local products more competitive, Dang said.
In addition, Brexit and the US’s withdrawal from the Trans Pacific Partnership(TPP) are likely to negatively impact Vietnam’s exports, he added.
Nguyen Van Sua, Vice Chairman of the Vietnam Steel Association, said that theglobal steel industry has been through ups and downs since the middle of the20th century, as can be seen by growth rates in different periods.
The industry’s annual growth rate was 5.1-7.4 percent during 1950-1970, 0.5-2.5percent in 1970-2000; 6.2 percent in 2000-2005; 4.5 percent in 2005-2010; 2.5percent in 2010-2015; and 2.9 percent in 2015.
In 2016, the global steel sector saw a slight recovery but there was still asurplus in the market with the production reaching nearly 1.63 million tonnes,a year-on-year increase of 0.5 percent, compared to a consumption volume of 1.5million tonnes.
China was the top producer with 808.4 million tonnes, ahead of other countrieslike Japan, India and the US.
Sua said that one of the main reasons that helped China’s steel products becomemore competitive was preferential tax policies designed to boost exportvolumes.
He said Vietnam’s steel producers have not optimised their production capacityand have not met the market’s demand for some products like hot-rolled coilsteel, leading to the strong increase in steel and steel product imports. In2016, total steel imports rose 25 percent year-on-year to 17.5 million tonnes.
Despite all the challenges, there are still positive signs for the prospects ofthe steel sector and steel companies’ shares in 2017, Sua said.
There are plenty of opportunities for local steel companies if they can apply aclosed production system to reach maximum production capacity, reduceproduction costs and assure high product quality to make their products morecompetitive.
They should also explore missing links in the sector’s value chain to reducethe volume of imported steel products, and diversify their product base, hesaid.
In general, listed steel companies have recovered after 2015, with profitsgrowing 70 to 130 percent.
Hoa Phat Group and Hoa Sen Group are the two companies that have the topprofitability ratio, while Nam Kim Steel JSC and SMC Investment Trading JSChave the highest returns-on-equity (ROE) ratios.
Listed steel companies had a robust year in 2016 with increasing combinedmarginal profits and net profits.
Some of the listed firms recorded outstanding profit growth, like the Hoa PhatGroup (89 percent), Hoa Sen Group (131 percent) and Nam Kim Steel JSC (312 percent).
In 2017, Vietnam will see more foreign capital flowing in as the country is oneof the top 10 fastest growing securities markets in the world, the conferenceheard.
On March 8 this year, the VN Index reached a nine-year high of 716.6 pointswith a market average profitability rate of 18-20 percent. The benchmark indexhas gained more than seven percent since the beginning of the year with totalmarket capitalisation of 72 billion USD, an increase of 26.6 percent year onyear.
Investors will also be attracted by the Government’s efforts to divest fromState-own enterprises and put those companies on the stock market, as also thelow market price-to-earnings (P/E) ratio.
Vietnam’s steel producers and traders will integrate deeper in the globalindustry, especially given that the Government has signed 12 free tradeagreements and is negotiating four others, Sua said.
He said that there was still room for local steel companies to grow as Vietnam stillhas a huge demand for their products to develop its economy and infrastructure.
He forecast that the total volume of steel and steel products produced in thecountry will reach 50 million tonnes by 2020 and 73 million tonnes by 2025.-VNA
VNA
