Impressive return

According to data from Vietnam Steel Corporation (Vnsteel), the total consumption of finished steel products in the first 6 months of 2024 of this unit is estimated at more than 1.7 million tons, an increase of 32% over the same period last year, of which long-rolled steel increased by 13%, cold-rolled steel and galvanized steel grew by over 90%.

Construction steel accounts for a large proportion in Vnsteel's finished steel consumption structure, construction steel output is estimated at 1.13 million tons, up 13% over the same period in 2023.

The increase in purchasing power and the improvement in the market have helped manufacturers boost consumption, with some units having good growth in consumption output compared to the same period such as Tisco, Vina Kyoei, and Natsteelvina.

Galvanized steel consumption in the Vnsteel system is estimated at 222,000 tons, a fairly good growth compared to the same period in 2023, notably Phuong Nam Steel, in which domestic consumption increased by more than 70% and export increased by 2.8 times compared to the same period last year.

Cold rolled steel consumption of galvanized steel increased well, helping to increase the demand for consumption and processing of cold rolled steel. Both units Phu My Sheet Steel Co., Ltd. and Thong Nhat Sheet Steel Joint Stock Company strengthened their system coordination and took advantage of the opportunity to maximize the output of main products and processing with a total output estimated at over 388,600 tons, a very good growth compared to the same period last year.

"It can be seen that, in addition to taking advantage of market opportunities and positive impacts from the economy, thanks to doing a good job of forecasting and assessing the context and market situation to come up with appropriate management solutions and production and business decisions, and thanks to the determination to overcome difficulties and strengthen coordination between units in the system, Vnsteel has basically completed the production and business plan for the first 6 months of 2024" - said a representative of Vnsteel.

Positive signal

According to a report by KB Securities Vietnam (KBSV), domestic consumption demand is showing signs of good recovery as consumption of construction steel and steel pipes increases respectively. The gradual increase in domestic demand will be the main driver of profit growth for Hoa Phat Group, as the residential real estate sector gradually recovers. KBSV expects HPG's steel consumption to increase by 18% and 12% in 2024 and 2025.

This securities company maintains the view that the steel industry is in the early stages of a new cycle and expects steel prices to return to increase. Currently, the construction progress of Dung Quat 2 is still on schedule and is expected to begin producing products, the first blast furnace will come into operation with a designed capacity of 2.3 million tons/year.

However, in the domestic market, KBSV predicts that steel prices will be supported by increased domestic demand, reducing adjustment pressure and competition with Chinese steel prices. In addition, input material prices have tended to decrease since the beginning of the year, which will help improve the gross profit margin of steel manufacturing enterprises in the coming quarters.

Overall, the steel industry's growth prospects from 2025 to 2027 are assessed positively thanks to the recovery of domestic demand from the second half of 2024, increased consumption output as new factories come into operation and the Chinese real estate market begins to recover.

Experts said that the steel industry's further efforts are expected to actively upgrade steelmaking technology, optimize production processes and promote recycling to transform the energy-intensive steel industry into a low-carbon one to promote high-quality development.

Such moves would address challenges posed by the European Union's Carbon Border Adjustment Mechanism (CBAM) and pressure from downstream industries such as automotive that are in dire need of environmentally friendly steel materials.

Construction materials expert, Master Pham Ngoc Trung, said: "CBAM prices carbon emissions during the production of carbon-intensive goods imported into the EU. This mechanism began a trial run last October and will be implemented from 2026 onwards. This will increase the cost of exporting steel products by 4-6% (including certification fees), which will result in additional costs of up to millions of USD for steel enterprises every year."