In the early days of January, Vietnam's steel sector witnessed a rejuvenation, marked by a collective price adjustment, hinting at a prosperous year ahead. Analysts predict a positive trajectory, attributing the revival to a global steel price surge, a warming domestic market demand, and potential profit margin expansions due to expected reductions in input costs.
In the opening chords of 2024, Vietnam's construction steel market orchestrated its first price adjustment. Manufacturers, in unison, elevated prices for rolled steel and various reinforced types, signaling a resurgence. According to Le Hai Thanh, an analyst at MBS, the steel sector holds promising recovery prospects, fueled by a global steel price uptick, a thriving domestic market, and the anticipated dip in input factors like coal and ore.
FPT Securities anticipates a prosperous year for Vietnam's steel industry, projecting a domestic market consumption surge to 18.6 million metric tons, an 8.7% increase from 2023. This marks a significant turnaround after two consecutive years of decline, attributed to robust public investment, exemplified by 12 projects initiated by the Ministry of Transport in late 2023.
Despite hurdles in the government's public investment sector and lingering challenges in the real estate market, expectations for a robust recovery in the civil construction sector drive domestic steel consumption in 2024. Amendments to the Land Law further contribute to the resurgence of the real estate and civil construction markets.
On the export front, World Steel identifies infrastructure growth in ASEAN, the United States, and Europe as stimulants for Vietnam's steel exports. Major European import partners, such as Italy, Belgium, and Spain, have displayed significant growth rates. A notable 128% growth in Italy, Vietnam's largest steel importer, signals positive momentum.
Export volumes are expected to improve in Q1 2024, driven by increasing price differences between steel in North America and Europe compared to Vietnam. Europe's stricter control over Russian steel imports further supports Vietnam's steel exports to the region. Anticipated demand from ASEAN countries and a resurgence in the US construction sector add to the positive outlook.
Despite a predominantly export-driven recovery, the Vietnamese steel industry looks poised for a bright dawn in 2024, benefitting from enhanced profit margins amid expected reductions in input costs.
Vietnam's steel sector emerges from a two-year downturn with a promising outlook for 2024. Fueled by global steel price surges, robust domestic demand, and anticipated reductions in input costs, the industry experiences a positive trajectory. Government initiatives, amendments to the Land Law, and a resurgence in civil construction further contribute to the sector's revival. While export-driven recovery dominates, enhanced profit margins signal a bright dawn for Vietnam's steel industry.