China Domestic Market
In the first half of 2024, China’s domestic construction steel market exhibited a fluctuating downward trend. After the brief post-Chinese New Year rally, the market began to decline. By March, unmet demand expectations, falling raw material prices, and the southern rainy season exacerbated supply-demand conflicts, leading to continuous declines in spot prices. Early June saw a slowdown in the decline due to heightened expectations of interest rate cuts, calls for proactive production cuts by steel mills, and positive policy news on crude steel control. Looking ahead to the second half, with the end of the southern rainy season, marginal improvements in demand are expected. However, high temperatures in northern and eastern regions will slow down construction activities, limiting the upward potential for steel consumption. Currently, steel companies are actively reducing production due to profitability impacts, creating a weak balance in supply and demand fundamentals. Thus, construction steel prices are expected to be low initially, with a potential rebound starting in the third quarter.
China Import and Export Market
In the first half of 2024, China exported 44.65 million tonnes of steel, a 22.8% year-on-year increase. The top three countries for Chinese steel exports were Vietnam, South Korea, and the UAE, with 5.512, 3.821, and 2.177 million tonnes, respectively. From January to May, China exported 5.917 million tonnes of rebar, an 11.7% year-on-year increase. The continued growth in exports is primarily due to China’s production cost advantages and strong steel price competitiveness, coupled with weaker-than-expected domestic demand, leading to a higher export willingness among steel mills. For the second half of the year, the advantage of China’s steel export prices is gradually weakening, with prices expected to fluctuate narrowly. Anti-dumping duties imposed by several countries on Chinese steel may negatively impact export volumes. For instance, despite the price advantage, a 6.2% tax and 10% VAT on Chinese wire rod imports into Vietnam diminishes its competitive edge, leading buyers to prefer untaxed alternatives.
Vietnam
In the first half of 2024, Vietnam’s long steel market prices remained generally stable but weak. Prices were influenced by narrow fluctuations in steel billet raw material costs, typically fluctuating by 100-200 VND/kg.
From January to February, high raw material costs kept steel prices elevated at 14,400-14,500 VND/kg, bolstering positive market expectations for the year. However, as the Lunar New Year approached, market activity slowed, and demand weakened as construction sites halted operations. After the holiday, low resumption rates led to continued market sluggishness, with prices maintaining a weak stability.
From March to April, falling raw material prices and unmet demand expectations caused continued price declines. Vietnam’s stagnant real estate sector and project delays due to funding issues slowed down construction, resulting in high inventory levels and weak post-holiday market performance. The bearish market sentiment persisted, with steel prices falling as expected.
From May to June, a slight increase in long steel prices was observed during the May Day holiday due to changes in raw material costs and VND depreciation, which raised import costs. Despite a slight improvement in market sentiment, actual consumption remained low, leading traders to adopt a cautious approach. As raw material prices fell again in June and no substantial positive news emerged, long steel prices continued to exhibit weak volatility.
Looking ahead, Vietnam’s long steel market may see initially weak but potentially stronger performance later in the year. The traditional rainy season in August could further depress demand, but ongoing major infrastructure projects like the construction of highways and airports are expected to boost steel demand in the long term.
Turkey
In the first half of 2024, Turkey’s long steel market experienced a strong start but weakened as the year progressed.
From January to February, strong demand pushed rebar export prices to $580-$620/tonne FOB. High buyer interest and rising scrap prices supported elevated export quotes. However, cold weather in February slowed domestic rebar sales, and new VAT regulations added uncertainty, leading to weaker prices.
From March to April, traditional low-season effects, Ramadan, and local elections dampened demand. Rising energy costs and a weak Turkish lira further pressured steel mills, which had to raise domestic and export prices to maintain profitability, making them less competitive.
From May to June, domestic economic turmoil and a ban on exports to Israel, a major market, weakened both domestic and export markets. While there was a slight recovery in June due to resumed construction activities, ongoing logistic issues in major markets like Yemen and increased domestic focus by competitors Egypt and Algeria eased export pressures on Turkey.
Looking forward, Turkey’s long steel market faces ongoing supply-demand imbalances. High costs and a weak lira, coupled with rising labor costs and unstable Middle Eastern economies, pose challenges. Despite these difficulties, large infrastructure projects and anticipated demand growth could offer some support to the market in the latter half of the year.
Conclusion
As the steel markets in Vietnam and Turkey navigate through these dynamics, the interplay of supply-demand factors, economic conditions, and policy changes will significantly shape market trends and pricing strategies in the coming months.
Information for this report was gathered from industry reports, market data, and interviews with key stakeholders in the steel industry.