Steel giants report huge losses in Q4

Hoa Phat, which accounts for nearly 35% of Vietnam’s construction steel market, reported a nearly VND2 trillion (US$85 million) loss in the fourth quarter of 2022, after earning a profit of VND7.419 trillion in the same period of 2021. Losses in two consecutive quarters of Q3 and Q4 dragged the company’s profits down by around 75% compared to the first half of the year, to more than VND8.4 trillion.

Vietnam Steel Corporation (VNSteel), accounting for 11.2% of the construction steel market, reported VND410.5 billion loss in the fourth quarter and a VND822.4 billion loss for the whole year, which was the company’s first loss since 2014 and its biggest loss since it started issuing financial statements in 2011.

Nam Kim Steel, the leading coated steel manufacturer in Vietnam, lost VND356.3 billion in the fourth quarter, which resulted in a loss of VND67 billion for 2022, after more than 10 years of making huge profits, including VND2.225 trillion in profits in 2021.

The steel market was gloomy last year.

A Vietnam Steel Association report shows that steel production dropped nearly 12% from the previous year to 29.3 million tons, while steel consumption dropped more than 7% to 27.3 million tons.

“For Vietnam’s steel industry, 2022 was a challenging year with falling consumption and complicated developments in material costs,” the report said. “Many businesses encountered difficulties and suffered losses.”

Domestic steel prices have been falling since August 2022, hitting a two-year low of VND14 million a ton in the fourth quarter.

The industry depends largely on public investment and the property market, the latter of which has been in a slump for months.

VNDirect Securities Corp. projected that the industry will continue to face difficulties this year amid a low demand for construction and high manufacturing costs.

The sector may see some upturn in the export market with China reopening and its real estate market recovering, the corporation said.