Vietnam’s steel industry is expected to face a tough second half (H2CY’21) due to resurgence in Covid-19 cases (especially in its steel hub, Ho Chi Minh City), Vietnam Steel Association (VSA) announced on 30 Aug’21.
Steel output in July falls
VSA’s above said forecast was based on Jul’21 crude steel and finished steel production figures which saw a decline of 1.4% and 6.5% m-o-m respectively. Vietnam produced 1.63 million tonnes (mn t) of crude steel and about 2.4 mn t of finished steel in July. The country’s monthly crude steel output has been declining since Mar’21.
However, compared to last year, crude steel output increased by 17.5% and finished steel output by 13.8%. This was mainly driven by an increase in Hoa Phat’s steel output after its two blast furnaces (No.3 and No.4) became operational in Aug’20 and Jan’21.
Steel consumption declines in July
Drop in steel output was also because major steel consuming sectors like automotive and construction remained less active in July. As per data announced by IHS Markit, Vietnam’s Purchasing Manufacturing Index (PMI) slid to 45.1 in July from April’s high of 54.2. The country’s car sales fell to 16,035 units in July. Due to a drop in construction steel demand, its production in July also remained low at 728,997 tonnes, down by 14% m-o-m and 8% y-o-y.
Steel production up y-o-y in Jan-Jul’21
Vietnam’s accumulative crude steel production from Jan to Jul’21 stood at 11.7 mn t, up 26% y-o-y. Finished steel production was recorded at 18.33 mn t, up 33.5% y-o-y in the above-mentioned period. The growth in steel production, sales and exports in Jan-Jul’21 was mainly driven by higher production of hot-rolled coils (HRCs).
Production of HRCs in Jan-Jul’21 stood at 4.03 mn t, more than double y-o-y and sales at 4.23 mn t, up nearly 2.2-fold y-o-y. Exports tripled to 816,800 t in Jan-Jul’21 over the same period last year.
The Vietnam’s steel market is concerned over prospects that China may impose 10-25% export tariffs on steel products such as HRCs. VSA expects these tariffs to be implemented in Q3CY’21. However, there is no official announcement from the Chinese government on the same as of yet.
It is to be noted that China is the key importer of Vietnam’s steel products. In H1CY’21, its share of steel imports stood at 51.3%, according to VSA.
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