Steel consumption recovered strongly in November after falling in October, as the demand for house and factory repairs after the stormy period, and the favorable weather for construction activities supported sales in all three main steel segments, according to Viet Dragon Securities Company (VDSC).
In addition, due to increasing steel prices, retailers tended to store more products in the short-term. In fact, hot-rolled coil (HRC) prices increased from US$530/ton in early November to reach US$700, stated the brokerage firm in a report.
Construction steel prices were predicted to increase due to higher material prices, it added. In the construction steel segment, the selling volume was supported by the domestic market as domestic sales in November increased by 61% month-on-month and 9% year-on-year.
Similarly, steel pipe consumption was still high owing to strong domestic demand. In the coated steel segment, export volume was still high due to the strong demand from the EU. Several coated steel manufacturers have sufficient export orders for production until March 2021.
For December, VDSC expected coated steel consumption can be still good due to high exports, meanwhile, construction steel and steel pipe demand could decrease slightly compared to November.
During the January – November period, total steel consumption (including construction steel, coated steel and steel pipes) was stable compared to the same period last year due to the recovery in late-2020, but sale results were different between segments.
In the construction steel segment, domestic consumption decreased by 3.7% year-on-year due to the slower growth in the construction industry. In contrast, exports were the positive signs in both the construction steel and coated steel segments because Vietnam’s steel production was less affected by the pandemic and steel import policy in several countries supported Vietnam’s producers, especially the EU.
In the coated steel segment, export volume increased strongly by 13% year-on-year, thus, total consumption recorded a growth of 3.4%.
Regarding the construction steel market share, the competition in each market has been increasing since the second half of last year. In the southern market, Hoa Phat Group (HPG) increased its sales by 77% year-on-year owing to the abundant volume with competitive price from the Dung Quat Steel Complex. In contrast, Pomina and Vinakyoei’s sales saw a decrease in selling volume, although Posco SS’s exit created room for other producers.
Besides the southern market, export is also a key driver for HPG’s growth as its export volume increased by 112% year-on-year. For 2021, the report noted the competition can still increase as Pomina ran its new one-million-ton mill commercially since the second half of 2020.
In the coated steel and steel pipe segment, the market share was relatively stable, but the increasing competition in the next years can change the structure sharply.