Vietnam is likely to see domestic steel demand shrink to 21.71 million mt in 2020, down 10.7% year on year, the Vietnam Steel Association said Nov. 25, due to a slowdown in the manufacturing and construction sectors.

Manufacturing grew 4.60% in the first nine months of 2020, its smallest increase in that period over 2011-2020, the association said, citing data from the General Statistics Office of Vietnam.

Industry and construction in the nine-month period grew 3.08%, its slowest rate versus the corresponding periods over 2011-2020, and accounted for 58.35% of GDP, the GSO data showed.

"The outlook for the construction industry is less positive...mainly due to slow growth in the infrastructure sector, and a slowdown in housing in the short term," Dinh Quoc Thai, vice president of Vietnam Steel Corporation, said.

"The growth of construction steel production and consumption in 2020 tends to decrease in the difficult context of Vietnam's economy," Dinh said. Vietnamese GDP grew 2.12% over January-September, its slowest increase over 2011-2020.

In spite of the bearish indications, the association reiterated that annual crude steel production will hit 18.34 million mt in 2020, up 5.0% from 2019.

Due to the lower demand, steel imports are expected to fall 10.3% year on year to 13.94 million mt, offset by exports more than doubling to 6.72 million mt.

On a more bullish note, some steelmakers in the country were hoping that a recent lowering of interest rates by the State Bank of Vietnam would lead to more construction projects and higher consumer property investments.

“It might take a while before the effects of lower interest rates actually lead into starting a construction project, but it would still be a good thing to look forward to,” a steelmaker said. “It is slightly cheaper to borrow from the banks now than in October.”

-- Clement Choo, Samuel Chin