In a recent report, Viet Dragon Securities Corporation (VDSC) said that hot rolled coil (HRC) plays an important role in Hoa Phat Group (HPG)’s business activities as the steel producer is benefiting from higher HRC prices and strong demand from galvanised steel exporters.
VDSC forecasts the company’s profit after tax will be about VND10.2 trillion (US$445.4 million) in the second quarter of this year, and fall to VND8.9 trillion (US$388.7 million) in the third quarter.
On the Shanghai Futures exchange, the HRC for August delivery was quoted at yuan 5,514 per tonne (US$861.38 per tonne) on Tuesday.
VDSC believes that Hoa Phat will not face any difficulties in consuming all output despite the selling price tending to be higher than that of some Chinese factories.
This is due to strong demand for HRC from domestic exporters of coated steel sheets. Steel companies are receiving large orders from the EU and North American markets, which have banned China's HRC. To meet the origin requirements of the base steel, domestic manufacturers of coated steel sheets mainly use HRC from HPG, Formosa, or India.
Currently, India's HRC supply is weakened due to the pandemic, causing higher export prices. As a result, domestic galvanised steel sheet manufacturers are short of cheap imports to meet the demand from the export market, allowing Hoa Phat to maintain production capacity and high selling prices.
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