Steel industry: Consumption increased, profit decreased

Although the production and consumption of steel products in October 2017 decreased by 5-7% compared to September 2017, it is still a month with good growth compared to the same period in 2016.

According to information from the Vietnam Steel Association (VSA), the output of construction steel produced in October 2017 reached 758,412 tons, up 13.8% over the same period in 2016, but down 9.35% over the same period last year. September 2017. In which, consumption reached 559,847 tons, down 14% and 24% over the same period and last month, respectively. Because of the difficulty in consumption, the inventory as of October 31, 2017 was 783,495 tons, an increase of 35% compared to the end of September 2017, however, that inventory is not a concern because businesses has closely followed the market and has forecasts for production.

 Photo

The two main reasons for the decrease in domestic consumption of construction steel products in October were because, starting from the end of September, distributors had almost little import and mainly promoted the consumption of previous inventories; along with the influence of the rainy weather. To maintain market share and at the same time boost consumption, steel producers had to simultaneously reduce selling prices. As recorded, in the North it has decreased 3 times: October 11, October 18 and October 23 with a gross reduction of 500-700 VND/kg; In the South, it will decrease from 400-600 VND/kg.

Another major impact that causes the price of domestic construction steel to decrease is input for steel production such as: scrap steel price has decreased by about 5 USD/ton, from 320-330 USD/ton to 320~325 USD/ton in October 2017. Domestic scrap price decreased from 7,200 VND/kg - 7,350 VND/kg to 7,000-7,200 VND/kg. Steel billet price also decreased by 27 USD/ton from 529~530 USD/ton to 500~505 USD/ton in October. Domestic billet price also decreased from 11,800 ~ 12,000 VND/kg to 10,800 ~ 11,200 VND/kg.

Notably, in the last week of October 2017, sales volume improved compared to the previous 3 weeks due to the decrease in inventories from construction sites or from commercial houses. Delivery volume has improved but is still at a low level below the average daily shipment of the factory. 
Particularly for steel pipe products in October 2017, including production and consumption of enterprises that are VSA members, all achieved better than construction steel. For example, steel pipe production reached 172,875 tons, up 1.04% over the previous month, and up 3.9% over the same period in 2016. In which, steel pipe consumption of VSA members reached 176,031 tons, an increase of 6. .33% over the previous month, and up 8.1% over the same period last year; welded steel pipe exports reached 28,155 tons, up 26.9% compared to September 2017 and more than 2 times higher than the same period last year.

For metal-plated and color-coated corrugated iron products, production enterprises reached 387,110 tons, down 0.55% compared to the previous month but up 30% over the same period in 2016. In which, consumption reached 312,228 tons, down 7.34% over the previous month, but up 21.4% over the same period in 2016; exports reached 165,678 tons, up 7.18% compared to September 2017 and up 42.4% over the same period last year.

In addition, for cold rolled steel, manufacturing enterprises in October 2017 reached 304,076 tons, down 9.2% over the same period in 2016; but consumption reached 176,875 tons, up 8% over the same period in 2016; exports reached 63,281 tons, up 79.8% over the same period last year. 
In general, the production and sales of steel products in the first 10 months of 2017 both increased compared to the same period of 2016, production reached 17,046,955 tons, up 22.8% over the same period in 2016, of which consumption reached 17,046,955 tons. 14,151,126 tons, up 18.4% over the same period last year.