Domestic steel demand to fall further in upcoming months

By Bui Hong Nhung   July 16, 2016 | 01:27 am PT
Domestic steel demand to fall further in upcoming months
A man checks steel quality at Hoa Phat steel mill in Hai Duong province, Vietnam June 14, 2016. Photo by REUTERSKham
The world's seventh largest steel importer might lose its ranking next month.

After a good start over the first five months of this year, Vietnam’s steel market has seen some signs of slowdown when local demand started dropping in June, according to the Vietnam Steel Association (VSA).

Data from VSA showed that both steel output and steel consumption surged by more than 30 percent on year in the first five months of 2016 to meet rising demand of the construction sector. However, these figures started falling down in June.

A report by VSA published on July 15 said that in June, Vietnam produced about 1.5 million tons of steel, down 6.6 percent against the figure of May. Steel consumption followed the same trend with a decline of 12 percent to more than one million ton.

Nguyen Van Sua, VSA's vice chairman, explained that demand for construction steel slowed down in June, driving the total sales to decrease. He projected that in the next two months, the demand will keep falling.

In addition, the fact that many retailers refused to buy steel in large quantity due to a fear of high inventory level amid steel price falls on the market has exacerbated the problem.

It’s estimated that the price of steel billet in June dropped by $15-20 per ton against the previous months, while the price of steel products went down by $36-45 per ton.

Sua said that to brace for the possible slump in local demand and maintain market shares against foreign competitors, Vietnamese enterprises should cut costs to offer lower prices and improve product quality as well.

Over the first half of 2016, Vietnam turned out some 8.2 million tons of steel, jumping 27 percent on year. Export volume also grew by nearly 40 percent on year to 1.2 million tons.

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