Steel prices spiraling out of costs amid electricity price adjustment

The retail electricity price increase has dealt a strong blow to the steel manufacturing industry, which is facing difficulties.

Soon after the electricity price increased by 8.36 percent, distribution agents of Bim Son, Vincem and Cam Pha steel manufacturers unveiled price increases of 30-40 percent for steel products.

Steel prices spiraling out of costs amid electricity price adjustment

Analysts predicted that the steel prices in the domestic market would continue rising in the last months of the year because the Chinese steel price has recovered, and bank loan interest rates and input material prices are increasing. If so, this will affect the implementation of real estate projects.

The domestic market cooled in the first two months of the year. According to the Vietnam Steel Association (VSA), the steel output increase was modest, 9.9 percent, compared with the same period last year (3.8 million tons). The consumption level increased by 19.9 percent (3.6 million tons), mostly attributed to the export increase of 19.9 percent. 

According to the Vietnam Steel Association (VSA), the steel output increase was modest, 9.9 percent, compared with the same period last year (3.8 million tons). The consumption level increased by 19.9 percent (3.6 million tons), mostly attributed to the export increase of 19.9 percent. 


VSA has projected a modest 10 percent growth rate of the steel industry this year as the peak growth period is over.

Goldman Sachs predicted that the steel demand in the world market would decrease by 5 percent. In Vietnam, analysts do not think there are positive prospects for steel enterprises this year.

FPT Securities commented that with the strong rise of protectionism in other countries, steel prices are likely to be divided. As the supply in Vietnam increases significantly, the price will be under pressure of going down.

However, this isnt bad news for everyone. Analysts said the recent electricity price increase of 8.36 percent will have big impact on steel mills using EAF (electric arc furnace), such as Pomina and Vina Kyoei.

Meanwhile, Hoa Phat, Tisco and Formosa, using BF (Blast Furnace) or BOF (basic oxygen furnace) will get benefits.

 

According to VSA, the output of the mills using EAF amounts to 65 percent of total domestic output. With the technology, the electricity consumption level is 600 kwh per ton, while the expenses for electricity account for 8-9 percent of total production costs, much higher than the 5 percent for BOF mills.

Therefore, analysts predict that Hoa Phat, one of the biggest manufacturers, has an opportunity to expand its market share thanks to lower production costs than its rivals.

Hoa Phat now can self-supply 40 percent of total electricity it needs as it can exploit the heat produced during the coking process to run a thermopower plant.

According to Vietcombank Securities, Hoa Phat’s electricity cost is 30 percent lower than normal blast-furnace mills and 80 percent lower than old-generation furnaces.

The Vietnamese steel market is still being eyed by foreign investors. Taiwanese Tung Ho Steel has received a license to make ingot steel and HRC with the capacity of 1.6 million tons.

RELATED NEWS

Vietnam’s steel manufacturing in a whirlwind of lawsuits

Chinese steel manufacturers flock to Vietnam to avoid US trade war

Mai Lan

 
 

Other News

.
Upward trend persists for M&A in real estate
Upward trend persists for M&A in real estate
BUSINESSicon  16/11/2020 

The recent trend of transferring sub-projects to other developers in large-scale real estate complexes is considered one of the efficient ways to bring many benefits to developers, investors, and buyers.

Recovery continues
Recovery continues
BUSINESSicon  15/11/2020 

As opposed to that of supply, the recovery of demand remains weaker, which means that the recovery of growth in the coming time will depend largely upon whether consumers can bolster their purchasing power

Gov’t orders solutions to support rice exporters to EU
Gov’t orders solutions to support rice exporters to EU
BUSINESSicon  15/11/2020 

The Government has directed the Ministry of Industry and Trade to coordinate with other relevant agencies to support local enterprises exporting rice to the European Union (EU) to make the most of EVFTA,

Retail spaces left empty as shops go online
Retail spaces left empty as shops go online
BUSINESSicon  15/11/2020 

Although Vietnam has managed to effectively contain the Covid-19 outbreak, many unsuccessful shops have shut down, as retailers have opted to go online to reduce operation costs, with the trend expected to grow further in the coming time.

International consultant to be chosen for North-South express railway project
International consultant to be chosen for North-South express railway project
BUSINESSicon  16/11/2020 

The State Appraisal Council has approved a plan to choose a consulting firm for the North-South express railway project through an international tender.

Amid global uncertainty, even traditional markets may be vulnerable: experts
Amid global uncertainty, even traditional markets may be vulnerable: experts
BUSINESSicon  15/11/2020 

It has been nearly a year since the first coronavirus-infected case was reported in China. There are now nearly 52.5 million infection cases worldwide and more than 1.29 million people have died of the disease.

New decree to prevent transfer pricing, limit thin capitalisation
New decree to prevent transfer pricing, limit thin capitalisation
BUSINESSicon  14/11/2020 

The Government’s recently-issued Decree 132/2020/NĐ-CP would help prevent transfer pricing and limit thin capitalisation to develop a healthy investment market, Deputy Director of the General Department of Taxation Dang Ngoc Minh said.

Proper mechanism needed to attract investors to PPP projects
Proper mechanism needed to attract investors to PPP projects
BUSINESSicon  14/11/2020 

A proper mechanism is needed to attract investors to infrastructure projects implemented following the public-private partnership (PPP) model, experts have said.

Oil fields becoming depleted, difficulties lie ahead
Oil fields becoming depleted, difficulties lie ahead
FEATUREicon  14/11/2020 

Oil and gas companies are struggling to cope with falling prices, oil field depletion, and difficulties in seeking new fields.

Business support packages in the frame for maximum impact
Business support packages in the frame for maximum impact
BUSINESSicon  14/11/2020 

With many businesses becoming gradually exhausted and in critical need of state support, many National Assembly members have asked the government to apply feasible solutions to lift them out of woes.

Curbed inflation eases concerns
Curbed inflation eases concerns
BUSINESSicon  13/11/2020 

The big rise in public investment disbursement will not cause high inflation this year due to a decline in public and business demand and oil price, as well as government efforts to stabilise prices.

Focus on efficiency for new incentives
Focus on efficiency for new incentives
BUSINESSicon  13/11/2020 

A list of sectors that could benefit from special tax incentives in Vietnam would be utilised to grow enthusiasm for overseas investors and, as a result, help to contribute towards luring more high-quality foreign direct investment.

Pressure on the Finance Minister
Pressure on the Finance Minister
FEATUREicon  13/11/2020 

As the holder of the keys of the national treasury, Finance Minister Dinh Tien Dung is facing great pressure.

Demographics, rising income, geopolitical shifts to drive ASEAN’s growth
Demographics, rising income, geopolitical shifts to drive ASEAN’s growth
BUSINESSicon  13/11/2020 

10 ASEAN member states are on the cusp of a tremendous leap forward in socio-economic progress and their growth will be propelled by four mega-forces, including favourable demographics, rising income levels, geopolitical shifts and digital tailwinds.

Local firms told to prepare for RCEP export opportunities
Local firms told to prepare for RCEP export opportunities
BUSINESSicon  13/11/2020 

Vietnamese businesses should prepare to export their products to other ASEAN countries ahead of the possible signing of the Regional Comprehensive Economic Partnership (RCEP) this week. 

Pork prices drop after country flooded with imports
Pork prices drop after country flooded with imports
BUSINESSicon  14/11/2020 

Vietnam spent VND5 trillion ($214.78 million) to import pork in the first nine months of the year, leading to a drop in prices.

Hanoi authorities to inspect farmstay projects, land violations
Hanoi authorities to inspect farmstay projects, land violations
BUSINESSicon  13/11/2020 

The Hanoi People’s Committee has assigned the Department of Natural Resources and the Environment to set up a taskforce to inspect farmstay projects and deal with land law violations.

Daily visits to local e-commerce sites top 3.5 million: VECOM
Daily visits to local e-commerce sites top 3.5 million: VECOM
BUSINESSicon  12/11/2020 

Online shopping traffic in Vietnam so far this year rocketed over 150 percent against a year earlier, with daily visits to e-commerce sites growing to 3.5 million, 

RCEP - A new boost for regional enterprises
RCEP - A new boost for regional enterprises
BUSINESSicon  12/11/2020 

The Regional Comprehensive Economic Partnership (RCEP) agreement, expected to be signed on November 15 within the framework of the 37th ASEAN Summit in Hanoi, 

Enterprises need to be pro-active during the pandemic
Enterprises need to be pro-active during the pandemic
BUSINESSicon  13/11/2020 

Nguyen Bich Lam, former director general of the General Statistics of Vietnam, talks on what Vietnamese enterprises need to do to maintain their business production during the COVID-19 pandemic.

 
 
 
Leave your comment on an article

OR QUICK LOGIN