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Vietnam’s “steel demand” is expected in the future

Recently, data released by the Vietnam Iron and Steel Association (VSA) show that in 2022, Vietnam’s finished steel production exceeded 29.3 million tons, down nearly 12% year-on-year; Finished steel sales reached 27.3 million tons, down more than 7%, of which exports fell more than 19%; Finished steel production and sales difference of 2 million tons.
Vietnam is the sixth largest economy in ASEAN. Vietnam’s economy has grown rapidly from 2000 to 2020, with a compound annual GDP growth rate of 7.37%, ranking third among ASEAN countries. Since the implementation of economic reform and opening up in 1985, the country has maintained positive economic growth every year, and the economic stability is relatively good.
At present, Vietnam’s economic structure is undergoing a rapid transformation. After the economic reform and opening up began in 1985, Vietnam gradually moved from a typical agricultural economy to an industrial society. Since 2000, Vietnam’s service industry has risen and its economic system has gradually improved. At present, agriculture accounts for about 15% of Vietnam’s economic structure, industry accounts for about 34%, and the service sector accounts for about 51%. According to statistics released by the World Steel Association in 2021, Vietnam’s apparent steel consumption in 2020 is 23.33 million tons, ranking first among ASEAN countries, and its per capita apparent steel consumption ranks second.
The Vietnam Iron and Steel Association believes that in 2022, Vietnam’s domestic steel consumption market has declined, the price of steel production materials has fluctuated, and many steel enterprises are in trouble, which is likely to continue until the second quarter of 2023.
The construction industry is the main industry of steel consumption
According to statistics provided by the Vietnam Iron and Steel Association, in 2022, the construction industry will be the main industry of steel consumption in Vietnam, accounting for about 89%, followed by household appliances (4%), machinery (3%), automobiles (2%), and oil and gas (2%). The construction industry is the most important steel consumption industry in Vietnam, accounting for nearly 90%.
For Vietnam, the development of the construction industry is related to the direction of the entire steel demand.
Vietnam’s construction industry has been booming since the country’s economic reform and opening up in 1985, and it has developed even more rapidly since 2000. The Vietnamese government has opened up foreign direct investment in the construction of local residential housing since 2015, which has allowed the country’s construction industry to enter an era of “explosive growth”. From 2015 to 2019, the compound annual growth rate of Vietnam’s construction industry reached 9%, which fell in 2020 due to the impact of the epidemic, but still remained at 3.8%.
The rapid development of Vietnam’s construction industry is mainly reflected in two aspects: residential housing and public construction. In 2021, Vietnam will only be 37% urbanized, ranking low among
ASEAN countries. In recent years, the degree of urbanization in Vietnam has steadily increased, and the rural population has begun to migrate to the city, which has led to an increase in the demand for urban residential buildings. It can be observed from the data released by the Vietnam Statistics Bureau that more than 80% of the new residential buildings in Vietnam are buildings below 4 floors, and the emerging urban residential demand has become the main force of the country’s construction market.
In addition to the demand for civil construction, the Vietnamese government’s strong promotion of infrastructure construction in recent years has also accelerated the development of the country’s construction industry. Since 2000, Vietnam has built more than 250,000 kilometers of roads, opened several highways, railways, and built five airports, improving the country’s domestic transportation network. The government’s infrastructure spending has also become one of the main factors affecting Vietnam’s steel demand. In the future, the Vietnamese government still has a number of large-scale infrastructure construction plans, which is expected to continue to inject vitality into the local construction industry.

Post time: Jun-23-2023