Leading steelmakers in the country have reported the biggest-ever Q3 losses in amidst low sales, rapidly falling prices, and high inventories.
The nation’s biggest steelmaker, Hoa Phat, incurred a negative after-tax return of VND1.79 trillion ($72 million), the first loss it has reported in 13 years. This is also the third consecutive quarter that its revenues have dropped, down 12% over the same period last year and down nearly 8% against the previous quarter.
Nam Kim reported Q3 losses of over VND400 billion, a record high, with revenues down nearly 1.7 times over the same period last year.
Steelmaker Hoa Sen racked up losses of VND887 billion in the last quarter of the 2021-2022 fiscal year, compared with a profit of more than VND940 billion in the same period last fiscal year. It reported a loss for the first time since the fourth quarter of the 2017-2018 fiscal year.
Companies under the Vietnam Steel Corporation (VnSteel) also posted record losses or minuscule profits in the third quarter.
Thu Duc Steel saw its biggest-ever Q3 loss of VND22 billion, nearly 37% higher than the same period last year; and Vicasa Steel reported its biggest loss since the third quarter of 2020.
Thai Nguyen Steel and Ho Chi Minh City Metal incurred losses of VND25 billion and VND12 billion. Meanwhile, two other VnSteel affiliates, Melin Steel and Cao Bang Steel, gained very small profits, down 95% and 99%, respectively, against the third quarter of last year.
Like steelmakers, many steel distributors and traders also suffered losses, with the SMC Trading Investment Joint Stock Company reporting its biggest-ever quarterly loss of nearly VND220 billion, compared with a profit of nearly VND130 billion in the same period last year.
Steel companies said they faced low domestic sales and export turnovers, a rapid decline in product prices, and high inventories in the third quarter. According to Vicasa Steel, the Vietnamese steel industry was affected by the Russia-Ukraine conflict, China’s “zero Covid” policy, and global inflation.
Higher input costs, credit tightening, high lending interest rates, and fluctuating exchange rates were other contributing factors. Hoa Phat said coal prices had trebled.
From mid-May to late August, steel prices declined 15 consecutive times from around VND19 million per ton to VND14.5-15 million. After a slight increase at the beginning of September, the prices fell twice to some VND14 million per ton, equivalent to the levels in late 2020.
According to the Vietnam Steel Association, the country’s finished steel output was 2.4 million tons in September, but sales were only 1.99 million tons. In the first nine months, it had steel inventories of some 1.6 million tons.