Before the news that China’s leading real estate company Evergrande was at risk of default, many metal products had a rapid price adjustment. Therefore, the question is how will this event affect the steel industry of a neighboring country like Vietnam?
Evergrande debt bomb immediately affects the price of many metals in China

In the past few days, the news that Evergrande, China’s top real estate developer, is facing a liquidity crisis, becoming the most indebted real estate enterprise in the world, is shaking the world market. Not only did the stock market plunge, the USD skyrocketed, but the price of raw materials also fluctuated strongly..

According to the Financial Times, real estate is a field that uses a lot of metal goods such as steel, copper… With this approach, Evergrande’s crisis is having a negative impact on the commodity market and price fluctuations. goods are unavoidable.

It is undeniable that China is the market for 40-70% of global goods, most of which is for real estate.

Specifically, the consumption of goods in the real estate sector accounts for a large proportion of China’s total consumption of goods. In which, accounting for 40% of China’s total steel consumption, 20% of the total global output (380 million tons/year).

And the Evergrande debt bomb is affecting the prices of many metals as the Chinese property sector accounts for a fifth of the total global supply of steel and copper.

According to Market Watch, during the September 20 session on the Chicago Mercantile Exchange (CME), the iron ore price 62% Fe expected to be delivered to China in December this year fluctuated around $91.75/ton at times, down 8.3%.

Copper price for December delivery lost 3.1% to about $4,115/ton and since the beginning of September, the price has dropped about 6%.

This was a one-month low for copper as a default by Chinese property developer Evergrande Group spurred a sell-off in financial markets and investors turned to the safe-haven dollar. all, according to Reuters.

Is Vietnam’s steel market involved?

The question is how this event along with the fluctuations of the commodity market will affect the steel industry of neighboring countries like Vietnam in the context that the industry is still trying to balance growth during the epidemic. still complicated.

Sharing with the writer, a representative of the Vietnam Steel Association (VSA) said: “The Chinese steel market has a relationship and has a lot of impact on the Vietnamese market, so if the Evergrande debt bomb “breaks” it will impact to some extent on the real estate industry as well as the steel industry of China and from there may affect the Vietnamese market.”

However, specifically what are the impacts, VSA believes that it is necessary to study more closely to have accurate data and forecasts about the impact on steel prices and production capacity, consumption steel products in the near future.

Sharing the same comment, Mr. Dinh Hong Ky, Vice Chairman of Vietnam Association of Building Materials, said: “When China’s large real estate developer Evergrande faces the risk of bankruptcy, it will certainly affect to the construction materials industry of this country, including the steel industry.

And when the Chinese giant’s steel industry is affected, it will affect other markets, especially neighboring markets like Vietnam, but how does it affect, directly or indirectly, to what extent? However, there is still no data or basis for measurement”.

Sharing more about his point of view, according to Mr. Ky, the possibility that Evergrande not only invests in real estate in China but also encroaches into other markets, possibly including Vietnam as a direct investment. or indirectly.

Therefore, when Evergrande has financial problems, it will likely affect Vietnam’s building materials industry, including steel. The cause when these real estate businesses face difficulties will be related to the output problems of the building material industries, including iron and steel.

In fact, considering the relationship of two neighboring markets Vietnam – China, especially in the steel industry, it can be seen that there is a close relationship in both export and import directions.

Specifically, VSA’s statistics show that China is the largest supplier of steel products to Vietnam such as hot rolled steel coil, steel wire, cold rolled steel coil, galvanized steel sheet, scrap iron and steel scrap. with a volume of nearly 4.3 million tons, worth more than $3.5 billion, accounting for more than 48% of the total import volume and 45.5% of the total import value of steel products in the first eight months of this year.

In addition, this is also an important supplier of Vietnam’s important steel production materials such as iron ore, steel billet, …