Steel producers record big profits on high prices

Steel producers continued to post great results in the second quarter of this year, supported by high steel prices.

In a statement to the State Securities Commission of Viet Nam (SSC), Hoa Phat Group (HPG) said that its revenue reached VND35.4 trillion (US$1.54 billion) in the second quarter, resulting in profit after tax of over VND9.7 trillion.

In the first half of this year, Hoa Phat reported revenue of nearly VND66.9 trillion, up 67 per cent year-on-year. Its profit after tax was more than VND16.7 trillion, three times higher than the same period last year.

The significant growth was driven by higher steel prices.

Due to disruptions amid COVID-19 outbreaks around the world, prices of materials for steel productions like coke and iron ore jumped, causing steel prices to surge.

On the Shanghai Futures Exchange, the price for October delivery of rebar was 5,737 yuan per ton yesterday, up 32 per cent since the beginning of 2021.

Strong construction activities during the first six months of the year also boosted steel product sales.

According to Viet Nam Steel Association (VSA), construction steel prices rose nearly 9.3 per cent for the year to VND16,500 per kg in July, which was up 50 per cent over the same period last year.

“The negative effects of the COVID-19 pandemic on the economy have boosted the Government to carry out great fiscal stimulus measures, helping the recovery of demand for construction materials since the second half of 2020 until the first half of 2021,” Viet Capital Securities JSC (VCSC) said in its report.

In the first half of this year, “construction steel consumption and total sales of galvanised steel and steel pipes grew by 14 per cent and 36 per cent respectively over last year,” the company added.

Tien Len Steel Group JSC (TLH) also has just released its second quarter results showing good performance. Of which, it witnessed a consolidated net revenue of nearly VND1.4 trillion, up 36 per cent over last year.

During the period, the company’s sales expenses rose sharply to over VND31.4 billion from just over VND8.1 billion of the second quarter in 2020.

However, the steel producer still set a record net profit of nearly VND196.7 billion, while it had lost over VND15.4 billion in the same period last year.

In the first six months of 2021, its net revenue reached nearly VND2.4 trillion, up 21 per cent year-on-year. This led to profit after tax of VND316.8 billion, compared to a loss of VND11.7 billion last year.