Outlook for Vietnam steel industry in 2024

What to expect in 2024?

Making forecast for the steel market in 2024, Mr. Nguyen The Minh, Director of Research and Product Development at Yuanta Vietnam Securities Company, believed that there are many factors showing that the steel industry has the potential to recover. For example, steel supply in China is likely to decrease, because of the ban on building new steel factories. In addition, some localities with many steel factories are required to reduce output to limit the impact on the environment, implement plans to cut carbon emissions, and improve air quality.

The Chinese government also proposed solutions to promote the recovery of the real estate market, and promote public investment and infrastructure investment to stimulate economic growth. Meanwhile, demand for housing is increasing as the country has loosened some regulations on people's home ownership, leading to demand for steel, and creating a push for steel prices to increase.

According to this expert, limited supply and rising steel prices in the Chinese market will have a positive impact on the Vietnamese steel market.

For the Vietnamese market, the positive point comes from the expectation that the real estate market will recover, thanks to the plan to promote public investment, focusing on infrastructure, as well as solutions to clear project legal frameworks. Accordingly, increased supply and demand for housing will lead to increased demand for steel which may lead to a rise in steel prices.

In addition, low lending interest rates help steel industry enterprises with high leverage ratios reduce pressure on interest costs and improve profit margins.

A report by FPT Securities Company (FPTS) also forecasts that the production output of crude steel and steel products in 2024 will reach 19.15 million tons and 28.36 million tons, respectively, an increase of 7.16%. and 6.76% compared to 2023. The sales volume of steel products in 2024 is estimated to increase by 8.68% and 5.19% in 2024, respectively, thereby creating room for steel enterprises to boost production.

But the recovery in steel demand will only start in the second quarter of 2024 with the driving factor being the recovery of the civil construction industry, while the industrial construction and infrastructure construction segments are expected to maintain the growth momentum from 2023.

SSI Research experts expect total steel consumption to recover by more than 6% over the same period in 2023, of which domestic consumption will grow by nearly 7%. The basis of this expectation is that the domestic consumption channel will show the first signs of recovery at the end of 2023, when consumption output in the period from September to November increased by 13%, after decreasing by 20% in the first 8 months of 2023.

In addition, steel consumption in 2024 will be supported by a better macro situation and real estate market.

Export volumes can maintain growth thanks to a positive global demand outlook. Specifically, world steel demand is expected to increase by 1.9% in 2024 compared to 1.8% in 2023, according to forecasts of the World Steel Association (WSA).

On the other hand, demand from ASEAN countries is expected to increase by 5.2% in 2024, higher than 3.8% in 2023. SSI Research expects export output to improve in the first quarter of the year due to the increasing difference between steel prices in North America and Europe and in Vietnam. In addition, Europe's tighter control of the import of semi-finished steel products produced by Russia in 2024 will also support Vietnamese steel exports to Europe.

With the above contexts, SSI Research experts predict that the profits of steel enterprises, especially Hoa Phat and Hoa Sen, will achieve high growth in 2024, thanks to improved consumption output.

For Hoa Phat, consumption output is expected to increase by 11% in 2024. The increased proportion of export channels in revenue will help Hoa Phat transfer the increase in raw material prices to steel selling prices more easily.

For Hoa Sen, the domestic market will be better than the export market and profits can increase more than 20 times compared to the low level of 2023.

Source: thesaigontimes

Compiled by VBI