Vietnam's construction steel production in the first eight months of this year reaches more than 6.6 million tonnes. (Photo: enternews.vn)Hanoi (VNS/VNA) - Theimplementation of many large projects after the social distancing period anddisbursement of public investment for infrastructure until the end of this yearare expected to support growth in construction steel consumption, according toRong Viet Securities (VDSC).
This trend is expected to persist in themedium term, whereby domestic steel mills will directly benefit, VDSC said.
The Hoa Phat Group (HPG), a listedconstruction steel company, hopes that its new production lines at the Dung Quatcomplex can catch up with the recovery of steel bar demand, thereby capturingmarket share and generate profit growth for the second half of 2020 and 2021.
Meanwhile, the market has shown signs ofrecovery for steel pipe and galvanised steel products from the beginning of Mayand this trend has persisted for many months, it said.
In the steel pipe segment, VDSC believes itis the segment with the least dependence on the export market and hassuccessfully recovered on the back of high domestic demand for steel inhousing, industrial real estate and manufacturing.
The industry reduced dependence on exportmarkets for galvanised steel sheets. In the first eight months of this year,domestic manufacturers exported 39 percent of their output of galvanised steelsheets, the same figure in 2019 but lower than 46-47 percent in the 2016-2018period.
Trinh Khoi Nguyen, Vice Chairman of the VietnamSteel Association (VSA) also predicted that in the short term, the domesticsteel market would see higher demand for steel after the social distancingperiod due to the COVID-19 pandemic.
Domestic production and sales of constructionsteel were expected to improve from September, he said.
The VSA said that construction steelproduction in the first eight months of this year reached more than 6.6 milliontonnes, down 6.9 percent over the same period in 2019.
Consumption of construction steel productsreached more than 6.7 million tonnes, down 5.8 percent year on year, including906,962 tonnes for export, down 5.9 percent.
At present, steel inventories in the domesticmarket total more than 604,000 tonnes. This is the average level of inventoryto support sales in the following months, the association said.
Meanwhile, VDSC reported that the consumptionvolume for all groups of steel products reduced in the first eight months ofthe year, excluding galvanised steel sheets, mainly due to COVID-19.
Hot rolled steel products faced a sharpdecline, while construction steel sales dropped nearly 6 percent for the firsttime since the 2008 financial crisis.
Steel pipe consumption continued to gosideways while galvanised steel output increased slightly year-on-year.
However, VDSC believes that steel demand forindustrial production is still relatively strong, while steel demand forconstruction is suffering the biggest impact from the pandemic.
The number of new projects in the residentialand commercial real estate market is still low due to poor medium-termprospects as the international flight ban continues, affecting tourism andinternational trade activities.
In August 2020, the domestic steel marketshowed positive signs, when output increased significantly compared to lastyear, except for cold-rolled steel, according to VDSC. Sales in August were up15 percent month-on-month. The sales growth was relatively steadymonth-on-month since the end of social distancing.
The association said in the first half ofthis year, sales of most steel businesses decreased compared to the same periodlast year. For example, Vietnam Steel Corporation recorded a 13 percent decreasein revenue, reaching 15.4 trillion VND; Nam Kim Steel Joint Stock Company’srevenue, down 19.3 percent to 4.8 trillion VND; Pomina Steel Joint StockCompany, down 18.4 percent to 5 trillion VND; and SMC Trading InvestmentJoint Stock Company, down 17.7 percent to 7.1 trillion VND.
Meanwhile, Hoa Phat gained revenue growthof nearly 30 percent to 39.7 trillion VND and Da Nang Steel Joint StockCompany’s revenue increased by 22 percent to 605.3 billion VND.
Hoa Phat's revenue growth came from anincrease in sales volume in the Southern market after the Hoa Phat Dung Quat SteelPlant came into operation./.
VNA
