While the Vietnamese steel industry showed a recovery and upward trend in prices towards the end of last year, rebar prices in China market increased by approximately 10%, reaching CNY 4,000 (USD 562) per ton. However, while prices have been stable, overall steel prices have remained relatively high since the middle of last year.
Domestically, construction steel prices have recovered after bottoming out in September. Global steel supply is expected to recover in 2024, down 1%, due to China's production cuts and the slow recovery of other major producers, according to a report by MBS Securities. However, the World Steel Association's forecast shows that global steel demand will increase by 1.9%, driven by construction demand in the EU and India.
Steel consumption for construction purposes is expected to increase as the domestic supply-demand balance improves and the government supports the real estate market. MBS predicts that the recovery in global steel prices and the recovery of the real estate market will increase domestic steel prices. As a result, construction steel prices are expected to increase by approximately 8% in 2024, reaching VNĐ 15 million (USD 614) per ton.
It is thought that the recovery in demand from the EU will revive the steel export market. Steel exports are expected to increase by 7% to 11.2 million tons in 2024. Hot rolled coil export prices are expected to rise to $800 per ton.
According to MBS's forecast, steel companies' gross profit margin in 2024 is expected to increase to 13% from 8% in 2023. Additionally, steel prices are expected to recover by 8%, but raw material prices are expected to fall slightly by 6%. These factors will allow industrial companies' gross margins to reach double digits this year. MBS also predicts that the overall profit of steel industry enterprises will increase by 40% compared to last year.
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