Steel prices continue to rise despite falling demand

By Tat Dat   March 9, 2023 | 02:30 am PT
Steel prices continue to rise despite falling demand
A man climbs on steel packages at Hoa Phat steel mill in Hai Duong Province, Vietnam. Photo by Reuters
The demand for steel remains weak, but producers have increased prices six times so far this year because of increasing input costs.

Statistics of the Vietnam Steel Association show that the average steel price at the end of February rose by 5% against the end of 2022, but was still 8% lower than the same period last year.

According to data of Steel Online, a distributor of many big brands such as Hoa Phat, Viet Y, Kyoie and Pomina, the current selling price of Hoa Phat coil steel is VND15.96 million (US$673.21) per ton, and that of Hoa Phat rebar steel is VND15.84 million.

Pomina has hiked its selling price for coil steel and rebar steel to VND17.57 million and VND17.6 million per ton respectively.

The price hike came after prices of input materials surged, the association said, adding that local steelmakers had to increase selling prices to reduce losses.

Vietcombank Securities said that world prices of input materials such as coke, iron ore and scrap steel have tended to rise since the end of last year, mainly due to the expectation of China’s revived steel production after its reopening.

Bui Duy Anh, deputy general director of Steel Online, told VnExpress that the hike in selling prices was also due to the scarcity of steel billets, which resulted from the closure of some billet plants last year.

Hoa Phat, which holds some 40% of the national construction steel market share, sold 877,000 tons of construction steel, hot rolled coil steel and steel billets in the first two months of this year, down 34% against the same period last year.

Steel Online predicts that steel consumption will slow down in the coming months when fewer civil construction projects are implemented due to the lagging macro economy.

Selling steel prices are likely to go sideways in the coming months, and the billet shortage may end around May because some factories have restarted their billet furnaces, according to Steel Online.

The securities company said the stagnant real estate market is a big barrier to the growth of the steel industry this year.

Real estate construction, which accounts for 60% of total steel demand, is sluggish because developers are facing difficulty in accessing new capital and due to legal risks.

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