Equity Analysis /
Vietnam

Vietnam Steel: Positive signs for coated steel exports to Europe

  • Europe’s steel prices have been rising fast from increasing energy prices and supply disruption from Russia and Ukraine

  • But EU’s quota can limit the positive impact of the Russia-Ukraine war on Vietnamese producers’ export volume growth

  • Still, exporting to Europe can bring higher gross margin in H1 22 for Vietnamese producers such as HSG, NKG, HPG

Rong Viet
14 March 2022
Published byRong Viet

Europe's steel prices have been rising fast with pressures from increasing energy prices and the potential disruption of steel supply from Russia and Ukraine. HRC prices in this area have increased by 35% from US$1,054/ton to US$1,419/ton in the last month. Hence, exporting to Europe can bring a higher gross margin in H1 22 for Vietnamese producers such as HSG, NKG, HPG.

Due to the demand recovery after the winter season and the increasing HRC price gap between Europe and Vietnam, the orders from Europe have improved strongly since January 2022 after decreasing during Q4 21. Currently, NKG has received sufficient exporting orders for production until end-May 2022.

However, the EU's quota can limit the positive impact of the Russia-Ukraine war on Vietnamese producers' export volume growth. HPG and Formosa can face short-term difficulties from surging coking coal prices, which can harm their gross margin. Rising risks of the disruption in supply from Russia encouraged coal importers to find alternative sources from Australia or Indonesia. Australia coking coal prices have increased sharply by 43% from the beginning of February 2022 to US$570/ton last month.