Consumption of construction steel has decreased sharply.

Sales of construction steel in April fell by double digits, reaching the second lowest level since 2022, despite continuously declining prices.

According to data from the Vietnam Steel Association (VSA), sales of construction steel in April reached over 735,000 tons, a decrease of 17% compared to the previous month and 15% compared to the same period last year. This is the second lowest consumption level recorded in the market since 2022.

Weak consumption has also led to a further slowdown in the production of construction steel. In April, the whole country produced over 710,000 tons, a decrease of 22% compared to the previous month and 37% compared to the same period last year. This is the lowest figure since 2022.

The April business results of Hoa Phat Group (HPG) – a company holding approximately one-third of the national construction steel market share – also reflect a similar situation. According to HPG's management, demand for construction steel in Vietnam and globally remains low. This is the reason why Hoa Phat's sales of this product only reached over 214,000 tons, a decrease of 28% compared to the same period last year. For the first four months of the year, HPG sold over one million tons of construction steel, a decrease of 34%.

Decreased demand has led businesses to continuously adjust steel prices. On May 19th, Hoa Phat further lowered the price of D10 CB300 ribbed steel bars by 200,000 VND to 15.09 million VND per ton. Price reductions of 150,000-250,000 VND per ton were also applied by other companies such as Viet Y, Viet Duc, Southern Steel, Viet Nhat, Pomina, Tung Ho, etc.

Thus, since the beginning of April, steel prices have decreased six times across the board. Currently, the prices of the two most popular steel types, CB240 and D10 CB300, are around 15 million VND per ton. This price level is equivalent to the base level in October last year - the time when steel consumption demand began to decline sharply.

In a recent report, Vietcombank Securities (VCBS) also noted that steel prices reversed sharply downwards from the end of April. Meanwhile, input materials, after a sharp price increase, have shown signs of cooling down, with iron ore and scrap steel returning to the low price levels of 2020, and coking coal also decreasing amidst falling energy prices. Looking ahead, downward pressure on steel prices remains significant due to the gloomy demand outlook stemming from high interest rates.

VCBS assesses that the residential real estate market has not yet seen significant real changes. The residential construction market has been negatively impacted by a decline in potential supply from developers and weakened demand for housing from the public amidst a difficult economic environment and relatively high interest rates. Given this situation, the potential future supply decreased sharply in the first quarter, reaching a multi-year low, partly reflecting the difficulties in steel consumption demand in the following quarters.

The outlook for the domestic steel industry is likely to align with international market forecasts. According to the World Steel Association (WSA), demand is projected to recover by 2.3% in 2023, reaching over 1.82 trillion tons, and by 1.7%, equivalent to over 1.85 trillion tons, in 2024. The association notes that production is expected to lead the recovery, but high interest rates continue to significantly impact steel consumption demand.

Tat Dat

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