Vietnam Steel Producers Face Slump in Demand Due to Weak Construction Season

Strategic Insights -

Vietnam's construction steel demand has faced a sudden slump, with 200,000 tonnes sold in October, a 17.5% decline from the previous month, according to the Vietnam Steel Association (VSA). The association attributes this drop to the frozen real estate market, natural disasters, and buyers waiting for price reductions. The current retail price of construction steel stands at VND7.5 million to VND7.7 million per tonne, while steel producers have a combined 230,000 tonnes in stock to prepare for potential demand increases.

Key Takeaways:

  • Vietnam's construction steel demand decreased by 17.5% in October, selling 200,000 tonnes, according to the VSA.
  • The VSA attributes the decline to the frozen real estate market, natural disasters such as typhoons and floods, and buyers waiting for price reductions.
  • Vietnam consumed 2.2 million tonnes of construction steel in the first 10 months of the year, a several percent increase over the corresponding period in 2004.
  • VSA forecasts a 20% increase in demand for construction-grade steel this year, accounting for large projects slated for 2005.
  • Pham Chi Cuong, VSA's chairman, stated that less people are building houses this year, contributing to the slow construction market.
  • Import prices of steel ingot are forecasted to go up to US$370-US$380 per tonne this month, potentially leading to a slight increase in the price of steel.

Statistics:

  • 200,000 tonnes of construction steel sold in October, a 17.5% decline from the previous month.
  • Current retail price of construction steel: VND7.5 million to VND7.7 million per tonne.
  • Combined steel stock for 230,000 tonnes in preparation for potential demand increases.
  • 2.2 million tonnes of construction steel consumed in the first 10 months of the year.
  • Forecasted increase in demand for construction-grade steel: 3.4 million tonnes, a 20% increase over 2004.

Sources:

  • Vietnam Steel Association (VSA)
  • Vietnam News, November 1
  • VNA, November 3
  • Asia Pulse, November 3