China's efforts to bolster exports by slashing prices below $1,000 per tonne have exacerbated the already rising burden on the Vietnamese steel industry.
China's steel exports reached 8.4 million tonnes in May, rising 7.6 percent on-year and reaching their greatest level since September 2016. In the first five months of this year, its steel exports climbed significantly to 36.3 million tonnes, an increase of 41 percent compared to the same period last year.
As a result of factories increasing exports to reduce inventory levels, prices continue to decline. China's export steel price fell to $920 per tonne in May.
Tran Dinh Long, chairman of the Board of Directors at Hoa Phat Group (HPG), stated at the Q1/2023 general shareholders' Meeting that China's recent increase in steel exports will be a significant pressure and that rivalry is inevitable.
Long said, "Over half of the world's steel is produced in China, putting enormous pressure on exports. In addition, the steel industry has developed on the domestic market, and numerous new steel projects are currently active. Consequently, local competition is also increasing."
In the first five months, Vietnam's steel industry remained under strain from low demand from domestic consumers and export competition. According to the Vietnam Steel Association (VSA), steel production fell to 11 million tonnes, a decrease of 22 percent compared to the same period in the previous year. Within this, the production of construction steel dropped by 26.3 percent to 4.26 million tonnes. Finally, sales decreased by 23 percent to 4.3 million tonnes, and exports reduced by 41 percent to 681,000 tonnes.
According to the VSA, corporations altered the selling price of construction steel five times in May alone. The frequency of the reductions stood at around once per week, with drops ranging from $4.25 to $8.50 per tonne per reduction. Depending on the type of steel, market consumption remains poor.
The VSA stated, "This indicates that construction steel prices are likely to continue their downward trend in the near future."
China has imported a substantial quantity of steel from Vietnam in the past due to increased demand. Now, however, demand has declined and exports have resumed, putting pressure on the global steel market, as stated by an HPG representative.
(VIR)