Steel market forms new price level

After a period of rapid price increases, especially in May-June 2021, steel prices have continuously increased by more than 50% compared to the beginning of the year, so far the steel market has formed a new price level higher than the previous year.

Impact of raw material prices

Information from the Ministry of Industry and Trade said that in order to recover the economy due to the effects of COVID-19, governments around the world issued many economic stimulus packages of tens of trillion USD, causing the price of primary raw materials of the world economy (oil prices,  the price of raw materials, the price of transporting materials) increased.

After an unusual period of price fever since December 2020, the steel market has now entered stable. Steel product prices have formed a new higher price level.

According to statistics from the Vietnam Steel Association, the amount of raw materials for steel production of enterprises is mainly imported (except that Thai Nguyen Iron and Steel Joint Stock Company of Vietnam Steel Corporation uses self-exploited iron ore raw materials with low output of about 300,000 tons / year), the number of iron ore and scrap steel for steel production in 2021 is expected to increase compared to 2020.

According to Mr. Nghiem Xuan Da, Chairman of Vietnam Steel Association, the price of imported raw materials of steel factories has increased.

Specifically, the price of iron ore in May 2021 increased compared to february 2020 price of 2.4 times (ore price increased from $86/ton to $206/ton) and increased compared to December 2020 by 32% (ore price increased from $156/ton to $206/ton); The price of scrap steel in May 2021 increased compared to february 2020 price of 1.9 times (ore price increased from $270/ton to $512/ton) and increased compared to December 2020 by 18% (ore price increased from $435/ton to $512/ton).

However, the price of iron ore mined at Thai Nguyen Iron and Steel Joint Stock Company is less volatile, the price of iron ore in May 2021 compared to February 2020 only increased by 8%.

The representative of Hoa Phat Group also said that the price of steel products in the first 5 months of 2021 increased compared to 2020 due to fluctuations in the price of input materials. However, the increase in product sales is still lower than the fluctuations in input price increases.

Specifically, in the market, steel billet price in May 2021 increased compared to February 2020 price of 62% (from VND 9,433,697/ton to VND 15,278,360 VND/ton) and increased compared to December 2020 by 41% (from VND 10,800,000/ton to VND 15,278,360/ton).

For construction steel prices, steel price in May 2021 increased compared to February 2020 price of 49% (from VND 11,340,608/ton to VND 16,869,341 vnd/ton) and increased compared to December 2020 by 30% (from VND 12,944,499/ton to VND 16,869,341/ton).

For HRC hot rolled steel coil prices, HRC steel price in May 2021 increased compared to February 2020 price of 94% (from VND 9,000,000/ton to VND 17,500.00 0 VND/ton) and increased compared to December 2020 by 48% (from VND 11,800,000/ton to VND 17,500,000/ton).

Steel market forecast at the end of the year

According to a report by the Vietnam Steel Association, in the first 6 months of 2021, Vietnam's steel production reached more than 15.9 million tons of all kinds, up 37% over the same period in 2020; in particular, steel billet reached 11.1 million tons, up 29% over the same period in 2020.

Consumption of steel products in the first 6 months of 2021 reached more than 14.05 million tons, up 35% over the same period in 2020; in particular, steel billet 10.08 million tons, up 29% over the same period in 2020.

Regarding the production capacity of enterprises, according to the report of the Industry Department, the Ministry of Industry and Trade, the steel production situation in 2020 and the expected 2021 of steel producers are stable and have high growth in enterprises with new projects to invest in production (such as Hoa Phat Group,  Nghi Son Steel Joint Stock Company).

In particular, for steel billet products, Hoa Phat Group and Nghi Son Steel Joint Stock Company in 2021 are expected to have a large growth rate compared to 2020. Specifically, Hoa Phat Group increased by about 38%, Nghi Son Steel Joint Stock Company increased by 44%, Vietnam Steel Corporation increased by 7%.

For construction steel, it is estimated that the construction steel production in 2021 of Hoa Phat Group increased by about 42% compared to 2020, Nghi Son Steel Joint Stock Company increased about 3 times compared to 2020 (according to the company's report), Vietnam Steel Corporation's output is equivalent to 2020.

For hot rolled steel coil (HRC), in 2021, Hoa Phat Group plans to produce 2,880,000 tons, an increase of more than 4 times compared to 2020 (in 2020, the hot rolled steel coil production line (HRC) at Hoa Phat Dung Quat Iron and Steel Production Complex has just come into production and has produced 686,433 tons).

According to the report of the units, in the first 5 months of 2021, the steel consumption situation was stable and had high growth, providing enough for the market demand for construction steel and galvanized steel products of all kinds.

According to the forecast of Mr. Nguyen Van Sy, steel industry expert, the production, supply and demand situation of steel products in 2021 continues to develop steadily.

Ordinary construction steel products meet the steel demand for the domestic market and tend to grow more slowly than in the first 6 months of the year. Hot rolled steel coil (HRC) will still be imported because the domestic supply only meets more than 50% of domestic demand.

The Ministry of Industry and Trade said that the price of steel products has entered stable and formed a new price level. It is forecast that by the end of 2021, the price of finished steel (traded in the Chinese market) will fall to $696.76 per ton, the price of iron ore 62% (delivered at Tianjin port, China) will fall to $200/ton.