Vietnam: Domestic and international iron and steel prices continue to rise

14/04/2021
China's plan to cut crude steel production in 2021 may face a big challenge due to rising world steel prices, which makes the country's steel mills strive to increase production capacity, more than enough to compensate for production. export decreases elsewhere.
According to S&P Global Platts Analytics, due to the above factor, the total global steel production this year may not be lower than last year.

Domestic HR coil price in China has risen by about 12% since the beginning of March to the highest level since mid-2008. The most recent price increase is mainly due to Tangshan city (China). suspend operations of some facilities that are equivalent to 30% of the city's blast furnace capacity, and the market predicts similar production cuts will extend beyond Tangshan. At the moment, the government is working towards the goal of cutting steel production in 2021.
 


The Jiangsu Provincial Iron and Steel Association on April 2 called on localities to control steel production, and Qinhuangdao City in Northern China said it was ready to shut down at 30% capacity. steel production.

Jiangsu province produces 121 million tons of crude steel by 2020, accounting for 11% of China's total production, according to the country's National Bureau of Statistics. Qinhuangdao City has a production capacity of 12 million tons of crude steel per year.

The reduction of steel production by Duong Son has led to the iron production capacity equivalent to about 34 million tons/year to stop working since mid-March until now. In theory, such a pause in iron production capacity will reduce the total Chinese iron production capacity from 1.032 million tons at the end of 2020 to 998 million tons at present. However, that figure is still much higher than the actual iron production of the country that Platts Analytics reports is 888 million tons in 2020.

Platts Analytics expects an increase in steel margins due to the production cut of Tangshan which will lead to an increase in the utilization rate of this year's cast iron capacity to higher than 87% at the end of March, to around 998 million. ton.

If this ratio increases to 90% in April, the iron-making capacity will be added 10 million tons/year, to the point that the iron industry has to pause to increase capacity to bring the rate of using China's iron-making capacity. National down below last year's level. If this ratio increases to 95% - due to a skyrocketing profit margin - then refining capacity will be added 60 million tons/year.

According to S&P Global Platts data, the profit margin of hot-rolled coil production in China on April 6 was 138 USD / ton, and rebar was 111 USD / ton.

China's iron and steel capacity in 2021 will increase


It is predicted that China will add 18 million tons/year of iron production in 2021 and crude steel capacity by 30 million tons. Thus, when new facilities go into production, the country will have to force many more iron and steel producers to suspend operations in the last 6 months of 2021 for the country to meet the output target.

Currently, China is considering lowering the steel export tax refund to reduce steel exports abroad and indirectly discourage steel production. Although it is not yet clear when the country will reduce its export tax refund, and how to do it, the market generally thinks that the Chinese government wants to reduce its steel exports by 2021. 20 million tons compared to under 54 million tons in 2020.

However, in the context of a tight global steel supply, the elimination or reduction of the export tax refund on this item will make the world steel price even higher. And then, steel exports still bring great economic benefits to the country's steelmakers, even with reduced export tax refunds.

Steel industry analysts and traders predict that China's long steel, hot-rolled coil, and plate export tax refund rates will be reduced from 13% to 9% - 4%, or maybe completely eliminated.


Based on the price of steel in China on April 6, the old offering for sale of Chinese hot-rolled coil Q105 will be around 913 USD / ton CFR if the rate of the export tax refund to 0%.

The selling price of hot rolled steel coil SAE of India on 6/4 is 920 USD / tonne CFR Vietnam, an increase of about 100 USD / ton compared to the previous 2 weeks.

The asking price of steel of the same type of Japan on April 7 was 1000 USD / ton, CFR Vietnam, the term was delivered at the beginning of June.

Conversely, the rise in steel prices globally also makes it difficult for iron and steel imports into China to increase. According to data of this country's Customs statistics in January and 2/2021, it is predicted that iron and steel imports into China in 2021 will decrease by 16 million tons compared to the previous year.

And even if China's steel exports in 2021 decreased by 20 million tons/year compared to last year, steel imports into this country this year will probably only reach 4 million tons.

From the beginning of the year until now, the price of iron and steel has continuously increased, although at a slower rate than the end of last year due to floods in Australia making the exploitation of iron ore and coke difficult so this country raised export prices. Meanwhile, some countries also increased import and export tax on iron and steel scrap, such as Malaysia just announced to increase export tax on iron and steel scrap from 0% to 15% ...

In the country, usually, after the Lunar New Year is also the construction season, the demand for steel and other materials increases.

From September 2020 up to now, every 2 weeks, steel prices have increased by about 2%, sometimes 2-3 days increased once. Compared to the third quarter of 2020, the current steel price has increased by 10-20%, rebar and pipe steel since the beginning of March 2021 has increased by about 20%. Currently, the price of steel in Hanoi City ranges from 14-16 million VND / ton, an increase of about 1.3 million VND / ton compared to the price in October 2020.

On April 10, in the North, Hoa Phat steel price recorded a sharp increase to VND 15,580 / kg for steel coil CB240; D10 CB300 steel also reached 15,780 VND / kg; in the Central region, steel coil CB240 soared to 16,110 VND / kg, while D10 CB300 steel increased 300 VND to 15,860 VND / kg; in the South, steel coil CB240 is 15,790 VND / kg; steel D10 CB300 reached 15,840 VND / kg. Vietnamese-German steel in the North and the Middle-grade CB240 is VND 15,690 / kg; type D10 CB300 is 15,720 VND / kg ...

With the trend of world steel prices going up, it is forecasted that domestic steel prices will remain at a high level.

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