Analysis and Price Forecast of Hot Rolled Coil (HRC) Steel in the Vietnamese Market for Q1/2025

Hot Rolled Coil (HRC) steel is one of the key materials in industries such as manufacturing, construction, and mechanical engineering. Price fluctuations of HRC steel in the international market, especially in China, significantly impact the pricing and development of the HRC steel market in Vietnam.

Price Fluctuations of HRC Steel in the Chinese Market Throughout 2024, we witnessed a decline in HRC steel prices due to a downturn in the real estate sector in China, which faced reduced demand and oversupply issues, including in the hot rolled coil steel production industry. China is the largest producer and consumer of steel globally, so price movements in the Chinese market have a ripple effect on the global market. In recent years, HRC prices in China have experienced considerable volatility due to various influencing factors, including:

• Supply and Demand: The imbalance between supply and demand is a key factor affecting HRC prices. When demand increases while supply is limited, prices rise, and vice versa. For example, in 2020-2021, HRC prices in China surged due to a post-COVID-19 recovery in steel demand, while supply was constrained by the government’s production control policies.
• Economic Policies: China's economic policies, including steel production controls, trade policies, and economic stimulus measures, also impact HRC prices. For instance, China's decision to cut crude steel production to reduce carbon emissions contributed to higher steel prices in 2021.

Risk of Trade War Trade wars, particularly during the early term of President Donald Trump's administration, caused significant volatility in global commodity markets. Tariffs and import quotas disrupted supply chains and heavily impacted industrial steel prices. For example, in 2018, the Trump administration imposed a 25% tariff on steel imports from several countries, including China, leading to a sharp rise in HRC prices in the U.S., which then spread to other markets, including Vietnam.

Specific Factors of the Vietnamese HRC Steel Market In addition to the influence of the Chinese market, the price of HRC steel in Vietnam is also affected by domestic market factors:

• Domestic Production: Domestic HRC steel production capacity, though still limited, has improved significantly but is still insufficient to meet domestic demand. Major steel producers in Vietnam include Hoa Phat Group, Vietnam Steel Corporation (VNSTEEL), and Pomina Steel JSC. However, domestic production remains insufficient, resulting in dependence on imports.
• Imports: Vietnam imports a large quantity of HRC steel from China and other countries. China is the largest source of imported HRC steel to Vietnam, accounting for approximately 60% of total imports. Other suppliers include South Korea, Japan, and Russia.
• Consumption Demand: The demand for HRC steel in Vietnam is influenced by the growth rate of the economy, public investment, and construction activities. In recent years, the demand for HRC steel in Vietnam has remained stable due to the growth of the construction and mechanical engineering sectors.

Forecast of HRC Steel Prices in Vietnam for Q1 2025 The forecast for HRC steel prices in Vietnam for Q1 2025 needs to consider the following factors:

• Global and Regional Economic Growth: The global and Asia-Pacific economic growth in 2025 is expected to remain stable, which will support steel demand.
• China’s Economic Policies: China is likely to continue implementing steel production controls and carbon emission reduction policies, which may impact the global supply of HRC steel.
• Global Supply and Demand: Factors affecting global steel supply and demand, including economic recovery post-COVID-19, geopolitical conflicts, and climate change, should be considered.
• Specific Factors of the Vietnamese Market: Domestic demand for HRC steel may improve due to the Vietnamese government's policy of promoting public investment. The capacity of domestic steel mills is improving, with the Dung Quat II steel mill expected to begin operations in Q1 2025. Changes in Vietnam's trade policies and tariffs aimed at protecting the domestic steel industry could have a significant impact on HRC steel prices in the near future.

Based on these factors, it is expected that HRC steel prices in Vietnam will fluctuate within a certain range in Q1 2025. However, with domestic demand expected to continue growing and potential restrictions on supply from China, HRC steel prices in Vietnam are likely to remain high or may experience a slight increase in Q1 2025.

Solutions and Strategies for Businesses To cope with price fluctuations and the risk of trade wars, businesses in Vietnam's steel industry need to implement the following solutions:

• Diversify Supply Sources: Avoid over-reliance on steel supply from China by seeking to diversify sources from other markets such as South Korea, Japan, India, and Russia.
• Enhance Competitiveness: Invest in technology, improve labor productivity, and reduce production costs to enhance competitiveness. Businesses should focus on producing high-quality steel products to meet the increasingly stringent demands of the market.
• Monitor Market Conditions: Regularly update information on steel price fluctuations, trade policies, and other factors impacting the market. Businesses need to establish efficient market information systems to identify opportunities and challenges in a timely manner.
• Cooperation and Networking: Strengthen cooperation and networking between businesses in the industry to share information, experiences, and mutual support. The formation of industry associations and the organization of information exchange forums will help businesses increase their competitive strength.

The HRC steel market in Vietnam is significantly affected by fluctuations in China's HRC prices and global economic and political factors. The forecast for HRC steel prices in Vietnam for Q1 2025 suggests they may remain stable or increase slightly due to continued growth in domestic demand and potential supply constraints from China. Businesses in the sector must closely monitor the market situation, analyze influencing factors, and proactively implement appropriate strategies to respond to price fluctuations, trade war risks, and enhance competitiveness in the context of international economic integration.

Sincerely,

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