Steel producers post notable divergence in Q3 performance

The third quarter financial reports from various steel companies showed a clear divergence. While some producers like Hoa Phat Group and Thong Nhat Flat Steel JSC witnessed profit resurgence, others faced ongoing losses.

Hoa Phat Group showed a robust performance, with Q3 revenue surpassing 34 trillion VND (over 1.3 billion USD), a 19% surge from the previous year. Noteworthy was the across-the-board growth in all segments, particularly a 42% rise in steel and an 80% surge in agriculture.

Net profits for the group hit more than 3 trillion VND after costs and taxes, marking a substantial 51% increase year-on-year. The upward trajectory in profits from a low point in late 2022 to the high in Q3 this year underlines the company's sustained recovery.

For the first nine months of 2024, the national leading steel producer reported revenue exceeding 105 trillion VND, a 23% rise year-on-year, achieving 75% of the annual target.

Its profits soared to 9.21 trillion VND, a remarkable 140% increase over last year, reaching 92% of its yearly profit goal.

Similarly, Thong Nhat Flat Steel JSC posted remarkable growth in Q3. The company's net revenue grew by 44% to 593 billion VND, with net profits nearly tripling last year's figure to reach nearly 11 billion VND.

Thong Nhat Flat Steel's revenue for the first nine months of 2024 surged to nearly 2.32 trillion VND, a 3.5-fold increase from 2023, with profits after tax nearing 26 billion VND, a significant gain from just over 120 million VND in Q3 of 2023.

It attributed its positive results to efforts in customer acquisition and sourcing reasonably priced supplies. As a result, production volume increased by 54% and consumption rose by 48% year-over-year. The rise in revenue was the main factor contributing to the company’s profit increase.

Nonetheless, a substantial number of steel entities faced losses in Q3 this year.

For instance, Thai Nguyen Iron and Steel JSC recorded a net loss nearing 79 billion VND, attributing market challenges like plummeting selling prices and sustained high raw material costs.

VNSTEEL – Thu Duc Steel JSC reported increased revenue of 18% year-on-year but suffered from escalating costs, leading to a decline in gross profits and a subsequent post-tax loss.

VNSTEEL - Nha Be Steel JSC, VNSTEEL - VICASA Steel JSC and SMC Trading Investment JSC also faced losses in Q3, reflecting the volatile market conditions impacting the steel industry.

Positive outlook

In a recent update, MB Securities (MBS) highlighted the challenges faced by companies in Q3, citing significant price pressure from weak demand in China and ongoing anti-dumping probes in key export markets like the EU and the US.

Despite these hurdles, a silver lining emerged in the form of domestic demand, which saw a commendable 20% surge, buoyed by a substantial 25% uptick in construction steel requisites.

MBS foresees an upturn in industry gross margins on account of lowered material input costs—coal and ore prices have dipped by 17% and 12%, respectively, alongside a 9% decrease in construction steel prices.

Experts predict a potential rise in domestic steel prices with China's economic stimulus, and anticipate market share growth in Q4.

Looking ahead to 2025, MBS projects a 7% and 6% increase in construction steel and hot-rolled coil (HRC) prices, pegging them at $611 and $590 per tonne. The outlook for 2025–2026 suggests a further 7% and 8% price hike for construction steel, reaching 608-657 USD per tonne.

On the market, steel stocks opened the week on a postive note with most of the ticker symbols in the industry gaining at least 1%.

On Tuesday, some still maintained the bullish trend. Hoa Phat Group soared 1.12%, SMC Trading Investment rose 3.4%, Nam Kim Group rose 0.24% and Vietnam Germany Steel Pipe increased 0.29%./.