Steel sector galvanized by growth prospects

A recovery of the real estate market and an increase in the number of construction projects are promoting the development of the steel sector.

Growth

At a seminar on the steel sector and the securities market in 2017, held in Hanoi on March 13, Vietnam Steel Association Deputy Chairman Nguyen Van Sua said total output of steel products reached 17.5 million tonnes in 2016, an increase of 16.8 percent over 2015.

Meanwhile, total domestic consumption stood at more than 15.3 million tonnes, a year-on-year increase of 23.7 percent. Some steel traders and manufacturers recorded high revenues in 2016, such as Hoa Phat Group, Hoa Sen Group, SMC Trading Investment Joint Stock Company, Tien Len Steel Corporation and Vietnam-Italy Steel Joint Stock Company.

The Vietnam Steel Association forecasts that the steel sector will continue to grow at 12-15 percent a year in the next five years. In 2017, pig-iron output is expected to increase by 80 percent to 4.5 million tonnes, while total production of steel products is forecast to increase by 12 percent to nearly 20 million tonnes.

Supply-demand gap

Steel manufacturing plants have not operated at their maximum capacity. Domestic production has fully met demands in terms of construction and cold rolled steel, steel pipes and color-coated galvanized steel sheet. However Vietnam currently imports many kinds of steel that the country has not yet produced, such as hot rolled coil and steel for manufacturing molds.

Khong Phan Duc, the general director of the Vietinbank Securities Company, said the steel sector exported 3.6 million tonnes of end products in 2016, an impressive figure given the small scale of the Vietnamese steel market. In addition, the potential for development of the steel sector remains large due to high demand for infrastructure development in cities and suburbs. However, steel businesses need to make the most of these opportunities to increase their added-value.

Steel businesses also need to diversify their products, especially those with export potential and high revenues, such as steel pipes and color-coated galvanized steel sheets. In addition, production scale must be optimized, contributing to increasing efficiency, saving production costs and improving competitiveness.

Thu Ha / VEN