Development trend of Vietnam’s steel industry in 2021

The Vietnamese market is forecast to grow thanks to controlling the Covid-19 epidemic, then demand in 2021 is forecast to increase thanks to the policy of focusing on investment in infrastructure.

In the first quarter of 2020, ASEAN countries were heavily affected by China’s nationwide blockade, then continued to be affected by disruption of the global supply chain. However, some infrastructure projects continue to be implemented, reducing the impact on the steel industry. The Government’s good control of the epidemic and promotion of public investment to promote economic development are estimated to bring brighter prospects for the steel and cement industries in the last months of 2020 and entering 2021.

Steel – Positive outlook for late 2020 and 2021

Vietnam’s steel industry is assessed to have shown signs of recovery since the beginning of the third quarter of 2020 when consumption output increased slightly. Specifically. Vietnam Steel Association (VSA) said: Steel production of all types in July reached more than 2.1 million tons, up 7.7% over the previous month and on par with the same period in 2019; Sales output in July reached over 1.9 million tons, an increase of 11.25% compared to June.

The latest report published at the end of August 2020 by SSI Research estimates that steel demand in the second half of the year will recover and increase by 4-5% over the same period due to the loosening and increasing of social distancing policies. public investment (estimated to account for about 15% of steel consumption).

According to statistics, consumption output recovered positively in the second quarter of 2020, due to increased demand from the residential segment. Compared to a decrease of 14% over the same period in the first quarter of 2020, a decrease of 1% over the same period in the second quarter of 2020 can be considered a sign of recovery.

Even domestic steel demand in the second quarter of 2020 increased by 1% over the same period, while the first quarter of 2020 decreased by 13%. SSI Research believes that this is due to pent-up demand from the first quarter as well as stable revenue consumption in the civil construction channel.

In the first 6 months of the year, consumption of finished steel products decreased by 7% over the same period, of which domestic consumption decreased by 6%. Export output decreased more sharply at 13% over the same period due to social distancing policies in some export markets.

However, SSI Research said, Vietnam benefits from steel demand continuing to increase strongly in China. According to the China Iron Ore and Steel Association, China’s steel consumption is estimated to increase by 40 million tons, equivalent to an increase of about 8% over the same period in the second half of 2020, and an increase of 2% for the whole of 2020.

In the first half of 2020, Vietnam’s steel output exported to China increased significantly, nearly 15 times, to 1.06 million tons, accounting for about 27% of Vietnam’s total steel export output.

In 2021, SSI Research estimates demand will increase by about 3-5% from a low base in 2020, thanks to expectations of general macroeconomic recovery, along with infrastructure investment and investment flows. FDI capital into Vietnam.

Previously in June 2020, the World Steel Association forecasted that global steel demand is expected to recover by 4% in 2021, which will support the export channel of Vietnamese manufacturing companies.

Specifically, Worldsteel forecasts that global crude steel output in 2020 will be at 1.65 billion tons, then increase by 3.8% to 1.71 billion tons in 2021.

Good sign at the end of the road

According to SSI Securities Company, the steel market in the coming months will follow a positive trend. The reason is that there will be about 700,000 billion VND of public investment capital spent by the Government in 2020, of which 200,000 billion VND will be spent on large infrastructure projects such as: North – South Expressway, Tan Son Nhat airport. … A good sign since July 2020, the disbursement of public investment capital has improved.

In addition, Vietnam benefits from continued strong demand for steel in China. According to the China Iron and Steel Association, in the second half of 2020, the country’s steel consumption is estimated to increase by 40 million tons, equivalent to an increase of about 8% over the same period in 2019, and an increase of 2% for the whole of 2020. In In the first half of 2020, Vietnam’s steel output exported to China increased significantly, nearly 15 times, to 1.06 million tons, accounting for about 27% of Vietnam’s total exported steel output. In the first 7 months of the year, China is the largest market for Vietnamese steel with 1.46 million tons, equivalent to 585.39 million USD, average price of 401.4 USD/ton, a sharp increase of 1,833% in volume, increasing 1,410% in turnover compared to the first 7 months of 2019.

Besides, Vietnam also has great opportunities in attracting FDI capital because of its ability to control the epidemic well and labor costs are still cheap. Therefore, when FDI enterprises enter Vietnam, the need to invest in factories and industrial parks will increase, leading to the demand for construction steel.

Regarding the steel market outlook in 2021, experts estimate demand will increase by about 3-5% from a low base in 2020, thanks to expectations of general macroeconomic recovery, along with investment activities. infrastructure investment and FDI capital flows into Vietnam. Besides, according to the World Steel Association, global steel demand is expected to recover by 4% in 2021, which will support the export channel of Vietnamese manufacturing companies.