An expert from SSI Research assessed that the Vietnamese steel market in the next 2 years will still follow a good growth trend when there are no more big steel production projects, so the steel supply has not increased too strongly.
The fever of global commodity prices has led many experts to make predictions about a commodity super cycle after the COVID-19 wave in the world. Particularly in the steel sector, China’s commitment to reduce waste in production, leading to a reduction in steel production output has helped many Vietnamese businesses benefit, recording impressive business results in the period. past of 2021; Steel stocks accordingly also waved with an increase equal to
During a webinar on the same day organized by Nguoi Hanh and SSI Securities, Mr. Dao Minh Chau, Head of the Department of Securities Analysis Center SSI – SSI Research said that steel demand has increased sharply in countries around the world. has pushed steel prices in the world to increase sharply in recent times, especially in the Asian market, steel prices have increased by 50-100%.
According to Mr. Chau, after the pandemic wave was gradually controlled, most countries have launched economic stimulus packages including hundreds of billions of dollars for public investment, pushing up demand for construction steel. strong. On the other hand, the demand-stimulating policy also causes people to buy residential real estate, leading to businesses promoting investment in construction of real estate projects. At the same time, the automotive industry currently accounts for 13-15% of the demand for the rapidly growing steel industry, especially in developing countries with little use of public transport and a need to own an automobile. personal bowl.
While demand is continuously supported by factors, supply is interrupted when some large steel producing countries such as the US, India, Europe or some input supplying countries such as Australia or Brazil. have a long closing time. Up to now, although steel production output has gradually recovered, it has not been able to completely meet the demand for steel since the supply chain is still broken and disrupted in circulation.
In the domestic market, steel prices have maintained an upward trend from about March 2020 until now, helping steel enterprises to record revenue and profit growth of tens to hundreds of percent like Hoa Phat with high profit. the third quarter record exceeded 10,000 billion dong. At the same time, taking advantage of the shortage of supply, galvanized steel sheet manufacturers such as Hoa Sen or Nam Kim also stepped up to participate in the export market.
Source: Online webinar organized by the Companion and SSI Securities
In the long term, steel supply will recover while steel demand is forecasted to decrease sharply
The prospect of steel prices in the near future, an expert from SSI Research said that it is necessary to evaluate both supply and demand sides of the market. In the long term, the supply will surely recover and increase again even though the big market, China, will still control steel production. In fact, in Southeast Asian countries, the high steel price also prompts businesses to plan to invest in increasing capacity to bring to the market a large amount of steel to benefit when prices are anchored at a high level.
Considering the demand, Mr. Chau assessed that the demand for steel will be negatively affected when the semiconductor crisis adversely affects a number of industries, indirectly causing a decrease in steel consumption for production. In particular, the explosion of the Evergrande debt bomb caused the real estate market in China’s billion-people market to plunge, thereby affecting the construction sector as well as the demand for steel. It is forecasted that the rate of decrease in steel demand in China will reach 10% and will continue to decrease further.
However, Mr. Chau assessed that Vietnam’s steel market in the next 2 years will still follow a good growth trend when there are no more large steel production projects, so steel supply has not increased too strongly. Particularly in October, the domestic steel price still increased by 4%-5% although the world steel price has cooled down. However, it should be noted that Vietnam’s steel price will normally be in sync with the world steel price, so it is forecasted that in the long term, steel price will tend to go down.
Answering investors’ questions when the stock of the leading steel company Hoa Phat (HPG) continuously adjusted sharply right after the record profit was announced, Mr. Chau assessed this was partly the cause. from pressure to take profits at high prices, besides concerns about price reduction when steel prices are already too high.
Looking forward to the end of the fourth quarter of this year, Mr. Chau assessed that Hoa Phat’s business results will continue to grow well, with a high probability of recording a new record of profit. Going to 2022, although profit will still grow in the first part of the year, the whole year profit may decrease compared to the whole year of 2021.
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