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Vietnam Steel Sales Dips To Its Lowest In October

Vietnam Steel Sales Dips To Its Lowest In October

Vietnam Credit in October 2022 posted a bullish outlook for the Vietnam construction sector. Its forecast is now in question given the registered bearish performance from Vietnam Steel Association.


Vietnam Credit added a number of legal amendments in the near future will likely support the residential real estate market, and a backlog at the end of 2021 can ensure a recovery in construction sales in 2022.

Vietnam construction industry was in dire situation in 2021 due to the pandemic, with the low value of signed contracts at the end of 2020 adversely affecting revenue and profits in this field. Additionally, the price of construction steel increased by about 41 percent in the year, putting pressure on the profit margin these companies.

In 2022, it is forecasted by SSI Research that a number of law amendments may support the residential real estate market. First, the Land Law will be revised in 2022 and will be completed in May 2023. The revised points are expected to have specific provisions on the land price compensation coefficient to solve the issue of site clearance.

While it quoted Coteccons and Hoa Binh Construction had new contracts value of about VND 25,000 billion and VND 18,000 billion respectively, which was 3.6 times and 2 times higher than in 2020. It was not enough to corroborate a bullish finish for 2022.

Vietnam Express International quoted findings from Vietnam Steel Association that steel sales fell to their lowest level in the last two years in October 2022, attributing to the slowdown in the real estate market and public spending. In precise terms, it was at 1.9 million tonnes — a 29 percent decline year-on-year. Major steel makers like Hoa Phat, Nam Kim and Hoa Sen reported plummeting sales in the third quarter, by 49 percent  year-on-year in the case of Nam Kim.

The association added the situation will remain difficult until the second quarter of next year given Vietnam’s biggest steel consumption comes from real estate and public works. Many housing and other property projects have reportedly stalled due to difficulties related to funding and laws.

Spending on public works in the first 11 months was only 58.3 percent of the target, as per figures from Ministry of Finance. The disbursement rate last year was 63.9 percent. On the global market too, steel demand has plunged, leaving Vietnamese companies with few export orders.

According to Vietcombank Securities Company, Hoa Phat, Hoa Sen, Pomina, and some other steel producers had to suspend operations at some of their plants to avoid inventory pileups. Many securities firms said steel makers’ business outlook would be gloomy until early 2023.

 

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