Steel market to recover in the fourth quarter

Industry and Trade Information Centre (Ministry of Industry and Trade) has forecast that the steel price would continue to fall in July and become stable in August. The market for construction steel will recover from Sep and in the fourth quarter.

This forecast was given on the basis that steel billet price in the global market has been slumping and would go up again from the end of Sep. According to analysts of some specialists, in the long-term prospect, steel billet price will recover and rise again from the end of the third quarter and fourth quarter of this year. Most of the mills have been using steel billets in production for construction contracts, rather than building storage area.

Moreover, consumption of steel continued to fall in June, leading inventory of the whole industry to be very high. Particularly, inventory for steel products currently stands at 371,000 tonnes and about 560,000 tonnes for steel billets. Till the end of May, sales of construction steel decreased by nearly six percent compared to the month before.

Specifically, sales volume was 384,000 tonnes, down by 20 percent compared to the same period of last year. Thus, the current supply has far exceeded demand with a slow domestic consumption.

Price for domestic construction steel to date has dropped four times with the total reduction from 2.3 to 2.7 million dong per tonne. Steel price has almost returned to the level in late February 2010.

Specifically, price of Vietnam – Korea steel is just 12.15 million dong per tonne. Similarly, Vietnam – Australia steel is at 12.136 million dong per tonne (sales price at factory, VAT not included). Many firms have not reduced list price but increased their discount offers from 200,000 to 350,000 per tonne in order to push sales.

The reason for the sharp fall in price of domestic construction steel is that steel prices were pushed up too high previously, experts said. In addition, prices of input materials have dropped sharply; prices of imported steel billet and steel scrap have fallen by $40 to $50 per tonne. Furthermore, consumption has become slower as rainy season has started.

Tags: Vietnam steel industry, Vietnam steel market