Steel prices continue to rise

Surveys at steel dealers on De La Thanh, Tam Trinh streets... (Hanoi) show that steel prices have been continuously increasing in recent days. The current steel price has exceeded 17 million VND/ton (import price at dealers).

Mr. Ngo Khanh, owner of a steel dealer in De La Thanh, said that since the beginning of 2023, steel prices have increased 5 times, with a total increase of about 1 million VND/ton. The reason given by factories is that the prices of steel billets and raw materials have both increased, causing the cost of products to increase, putting the price of this product on a new upward trend after a sharp decline in the last months of last year.

The most recent price increase was on February 22. However, while talking to reporters, the owner of this steel dealer continued to receive a notice of a steel price increase on March 6, with an increase of VND 200,000/ton. Currently, the price of steel sold at dealers has exceeded VND 17 million/ton. This price has increased by about 7% compared to the end of 2022, but compared to the peak of nearly VND 21 million/ton last year, it is still about 15% lower.

The price of rolled steel in the North is around 17.5 million VND/ton, in the Central region it has increased to 17.6-17.8 million VND/ton, depending on the standard; and in the South, the selling price of steel has also increased to 17.49 million VND/ton, depending on the type.

According to the Vietnam Steel Association (VSA), steel prices have been continuously increasing recently, mainly due to the import prices of raw materials for steel production such as coal, iron ore, scrap steel, hot-rolled coils, etc., which have not shown any signs of stopping. The selling price of finished steel products has increased more slowly than the increase in input materials, so the business efficiency of construction steel companies remains low, with difficulties in purchasing input materials and selling finished products. VSA believes that the high price of raw materials has caused domestic factories to increase their selling prices many times to compensate for production costs and reduce losses.

Information from VSA shows that iron ore prices increased by about 6.5 USD/ton compared to early December 2022. Similarly, the export price of coking coal at Australian ports was traded at about 282.5 USD/ton, a sharp increase of 52.25 USD/ton compared to early December 2022. Scrap steel prices also increased by 500-700 thousand VND/ton, up to 8.9-9.5 million VND/ton... Imported scrap prices also increased sharply by 50 USD/ton, up to 400 USD/ton from late December 2022.

Seaborne billet prices continued to rise from several days ago when only a handful of Southeast Asian mills offered billet, with an Indonesian mill reportedly offering at $610-$615/mt FOB Indonesia.

Market commentary, the Vietnam Commodity Exchange (MXV) said that signs of stability in the real estate market have helped lift iron ore futures prices. In addition, according to the World Steel Association (WS), total global crude steel output will reach 1,878.5 million tons in 2022, down 4.2% compared to 2021, with the top three producers being China, India, Japan and the US, respectively. In the context of slowing supply growth, the prospect of better consumption in the construction and infrastructure investment sectors, especially in Asia, will be the guiding principle for the recovery of iron and steel prices and an advantage for producing countries.

In Vietnam, demand for iron and steel is also expected to improve in 2023 as more public investment projects are implemented. Recently, the Ministry of Transport was assigned by the Government to disburse public investment capital of VND94,000 billion, 1.7 times higher than in 2022.
Therefore, iron and steel prices are expected to continue to increase in the coming time, when iron ore supply is tight, while demand tends to increase.

Mr. Ngo Khanh, the owner of a steel dealer, said that normally every year, steel prices will increase sharply from March to June. Like last year, within just 2-3 months of the second and third quarters, steel prices continuously increased and exceeded 20 million VND/ton. This year, the increase is expected to be similar when many indicators of tight supply are present.

According to the assessment of the Bank for Investment and Development of Vietnam Securities Joint Stock Company (BSC), in the first quarter of this year, steel prices may recover by 2-3% compared to the same period due to seasonality and the recovery of world steel prices when China opens up. In the second and third quarters of 2023, steel price movements will depend on the recovery level from steel demand. According to BSC, the expectation of a recovery in the Chinese market and the target of disbursement of domestic public investment expected to increase by 20-25% will be the driving force for the recovery of the steel industry in the second half of this year. However, the growth momentum is also affected by the view that the recovery rate of demand will remain slow in 2023, and steel supply may increase again when China opens up.

According to VNA