Steel products manufactured by Hòa Phát Group. Despite rising demand in May, steelmakers expect the struggle to continue. —VNA/VNS Photo Tuấn Anh

HÀ NỘI — Although the demand for building steel rose by more than 26 per cent in May compared to the previous month, steel prices decreased for the tenth month, and steelmakers expect the struggle to continue.

A monthly report from Việt Nam Steel Association (VSA) showed that construction steel output increased by 14.18 per cent over the previous month to 812,085 tonnes, but decreased by 27.3 per cent year-on-year.

Sales of the products in May increased by 26.08 per cent month-on-month to 927,618 tonnes but were unchanged compared to the same period last year.

Raw material prices tended to increase slightly at the end of May, with the rally extending to June. However, due to weak demand, steel producers had to gradually reduce their prices and implement subsidies.

In the domestic market, as of June 15, some steel manufacturers have lowered their prices by VNĐ100,000 to VNĐ270,000 per tonne for CB240 steel coils, down to about VNĐ13.94 million to VNĐ14.82 million per tonne. They kept the same price for the CB300 rebar as compared to the latest adjustment.

Data compiled by steelonline.vn showed that, during the period, Hoà Phát Group (HPG), the country's largest steel producer, quoted its CB240 steel coils in the northern market at VNĐ13.94-14.82 million per tonne, a decrease of VNĐ100,000.

In the central and southern markets, the prices were at VNĐ14.04 million per tonne and VNĐ14.31 million per tonne, respectively, down VNĐ100,000 and VNĐ200,000.

The company said that the falling costs of input materials and steel billets was the cause of the decline in steel prices.

In the first quarter, Hòa Phát achieved VNĐ26.6 trillion (US$1.13 billion) in sales, a decrease of nearly 40 per cent over last year. Its consolidated profit after tax was more than VNĐ383.2 billion, completing 5 per cent of the 2023's plan.

Despite the decline, the results were positive after losing up to VNĐ3.5 trillion in the last two quarters.

The company said that steel production and related products contributed 94 per cent of profit after tax.

The selling prices have been impacted by negative sentiment and sluggish demand across global markets.

The real estate industry shows no signs of optimism as the number of public housing projects under construction is low and the banking system is tightening credit.

The sector has a huge influence on the demand for domestic steel, accounting for some 60 to 65 per cent of the industry's demand.

Since the beginning of 2023, a number of policies supporting the real estate industry have been implemented, but the market needs more time to recover, according to VNDIRECT Securities.

In addition, given attempts to increase exports, Chinese steel businesses are accelerating their price reduction rates to compete, adding pressure on the downtrend of steel prices in the international markets.

The General Administration of Customs of China (GACC) reports that the nation's steel exports in May totalled 8.4 million tonnes, an increase of 7.6 per cent year-on-year, the highest level since September 2016.

Overall, the first five months saw a high increase in steel exports, up 41 per cent to 36.3 million tonnes from the same period last year.

VNDirect said that steel prices have cooled down recently, and the bearish trend is expected to continue through 2023 due to weak demand and lower input materials prices. — VNS