Dung Quất steel project likely change Hòa Phát’s market share

Update: December, 06/2019 - 16:38


New supply from Hòa Phát Group’s Dung Quất steel project is likely to increase Hòa Phát's market shares in the domestic steel market. Photo

HÀ NỘI — Hòa Phát Group’s Dung Quất project will increase steel supply, leading to change market shares of steel firms on the domestic market, according to KIS Vietnam Securities Corporation (KIS).

KIS said it will also increase competition among rival steel providers.

The Dung Quất project will begin next year and will double output of steel products to 4.35 million tonnes per year in the first stage.

With the current domestic market demand, the increase of supply (equivalent to 18 per cent of the total domestic market consumption) would cause short-term oversupply.

KIS estimates that Việt Nam's long steel consumption growth will fall to 5.5 per cent because of weaker consumption comes in both export and domestic markets.

For the export market, despite the strong growth of steel exports to Cambodia, reduction of import demand to South Korea and Thailand made Việt Nam’s steel exports in the first 10 months this year increase by 6.5 per cent year on year. Meanwhile, this figure in the same period of 2017 was more than 34 per cent.

For the domestic market accounting for 90 per cent of total steel demand, authorities in some large cities like HCM City have reviewed the approval process of many real estate projects which has slowed down steel consumption.

This situation could continue until the end of 2020, KIS said, so some steel producers have begun to look for new opportunities in other cities.

KIS expects long-term steel consumption growth will stabilise at 5.5 per cent by 2020.

According to KIS's estimates, Hòa Phát will supply 3.88 million tonnes of steel by 2020, leading to its market share at 35 per cent.

A similar situation will happen for flat steel products in the second phase when the Dung Quất project markets its hot-rolled coil (HRC) steel.

When the second phase is completed midway through next year, it has a capacity of 2 million tonnes of HRC per year. — VNS

  • Tags: