Steel demand is forecast to decline and will eventually balance itself out to the unusual rise in prices. However, this will be a slow correction rather than a sharp decline.
According to World Steel Association (Worldsteel) data, world crude steel production of 64 countries was 161.6 million tons in July, up 3.3% year on year. Generally for the first 7 months of 2021, crude steel production reached 1165.3 million tons, up 12.4% over the same period in 2020.
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World crude steel production to July 2021 (Source: World Steel)
In particular, China – the world’s largest steel producer, recorded a slight decrease in output in July, reaching 88.6 million tons, up 8.4% compared to July 2020. Other large crude steel producing countries such as India, Japan, USA, Russia, Korea, etc.
In terms of steel prices, hot rolled coil in the futures market in the US has reached a record high in recent trading sessions as steel mills in the country increased their asking prices for spot shipments. to over $2,000/ton.
In the Vietnamese market, the production and sales of finished steel products of all kinds of members of the Vietnam Steel Association (VSA) decreased. Specifically, finished steel production reached 2.35 million, down 1.9% compared to July 2021, equivalent to the output level of the same period in 2020; Sales of steel of all kinds reached 1.9 million tons, down 9.4% over the previous month, respectively, and down 8% compared to August 2020.
Generally in the first 8 months of 2021, production and sales of steel products still increased quite well due to inheriting good business results of the first months of 2021, reaching 29.2% and 25.1% respectively.
Assessing the prospect of steel group recently, VCSC Securities said that although the high steel price brings significant benefits to steel manufacturers in the short term, it also creates economic pressure on many industries. downstream. These include construction, machinery manufacturing and real estate, among others, as well as the infrastructure development plans of governments around the globe.
This situation will lead to a decrease in steel demand and will eventually compensate for the unusual increase in prices. However, this will be a slow correction rather than a sharp decline. Besides, higher raw material costs will cause the gross profit margin of steel companies to reverse in the second half of 2021.
Meanwhile, VSA forecasts that sales of construction steel in September will be more promising thanks to some provinces and cities that will ease the distance after controlling the COVID-19 epidemic, gradually stabilizing production and business activities. in the new situation.
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