What are the expectations for the steel industry in 2024?

Vietstock – What to expect from the steel industry in 2024?

SSI (HM:) Securities Company Research, Research Analysis Department SSIIt is expected that, benefiting from the recovery of steel demand and prices, the profits of the steel industry may grow strongly in the first half of 2024.

In 2023, affected by the macroeconomy, especially the real estate market, the total domestic consumption of finished steel products will decline.

In the first 11 months of 2023, the consumption of construction steel, galvanized steel and steel pipes decreased by 13.5%, 6% and 0.9% respectively year-on-year, reaching 9.73 million tons, 3.81 million tons and 2.22 million tons respectively.

“The situation in 2023 is quite similar to that in 2012, with demand for construction steel also falling by about 7% during the same period due to slowing GDP growth and a freeze in the real estate market.“, SSI the study commented.

Among them, domestic consumption of construction steel, galvanized steel, and steel pipes all declined. With the help of export channels, construction steel consumption dropped by 23.3% year-on-year, and galvanized steel consumption increased by nearly 17%.

Steel demand and prices to recover in 2024

CTCK analysts look ahead to 2024 SSI Demand is expected to recover, especially in the domestic market. They cited a recovery in consumer output in the final months of the year as one reason to expect a recovery. From September to November 2023, domestic construction steel consumption increased by 13% year-on-year, and fell by 20% in the first eight months.

“We predict that total steel consumption will recover by more than 6% in 2024, of which domestic consumption will grow by nearly 7%.”, analyst SSI explain. “Steel consumption in 2024 will be supported by a better macro situation and the real estate market.“.

Have export channels, SSI Research predicts continued growth is expected due to positive global demand prospects.

The World Steel Association expects world steel demand to grow by 1.9% in 2024, compared with 1.8% in 2023, with demand in the United States and Europe increasing by 5.8% and 1.6% respectively after falling by 5.1% and 1.6% respectively. 1.1% in 2023.

“We expect export volumes to improve in the first quarter as the gap between steel prices in North America and Europe and those in Vietnam widens. In addition, Europe’s implementation of stricter controls on the import of semi-finished steel products produced in Russia in 2024 will also support Vietnam’s steel exports to Europe.“, analysts said.

Steel prices will rebound in 2024

Regarding steel prices, analysts said SSI A recovery is expected in 2024 as supply and demand become more balanced. It is worth noting that China’s steel inventories have fallen significantly in recent months, helping to alleviate recent global oversupply pressures.

China production and inventory status

“However, we do not expect steel prices to rise significantly as overall demand remains affected by weak demand from China as the property market does not improve much. On the other hand, rising steel prices relative to raw material costs may prompt a resumption of Chinese manufacturing activity.“, SSI Research Reviews.

Stock prices have reflected earnings expectations

according to SSI Research believes that profits of steel companies have bottomed out in 2023 and will recover this year.

“We expect steel companies’ profits to achieve high growth in 2024 compared with the low base in 2023. This is helped by improvements in consumer output, especially for HPG (HM:) and HSG (HM:), with gross margins rising again starting in 2023. Steel prices may end the downward trend of previous years and hit multi-year lows.”, commented the analyst.

Due to the low profit base in the first half of 2023, profit growth in the first half of 2024 is likely to be higher. The recovery trend may be maintained after 2024, but SSI The study warned that consumer demand and profit margins could still fluctuate wildly.

Forecast of profit margins of steel companies in 2024

For steel industry stocks, CTCK analysts SSI Although profits are expected to recover in 2024, don’t overestimate this group. The reason is that steel stock prices will rise sharply in 2023, and valuations are already high, partially reflecting the industry’s one-year profit prospects.

According to the statistics SSI Research shows that steel stock prices will rise by an average of 58% in 2023, which is 46% higher than in 2023.

Wu Hao