As an engineer working in steel industry for almost of my career until now, I think every sectors of the economy has its periods of prosperity and recession and steel industry is no exception.
The most recent crisis in this industry is the end of 2018 which is caused by the trade war between China and USA. During the pandemic, everything is blocked down but surprisingly, the industry show its impressive growth. Early this year, people said the recession in late 2022 was foreseen due to the Ukraine-Russia war causing the increase of coal price, monetary policies of governments, the decrease of real estate.
Inventory is relatively high while the market demand is low and of course the sale is worse. Several company show their losses in 3rd quarter financial report, there is no choice but cut down the production. Big company like Hoa Phat had to ceased their 4 out of 7 blast furnaces. They also try to push the sale by offering a low price to reduce the inventory. Expansion plan, of course, is stopped. They try to cut all type of expense - labor, materials, operation. Laborers have to take alternate leave. Luckily there were no mass layoffs.
The government, actually, the state bank raise the interest to attract the cash flows out of the market to control the inflation. It's more difficult for private entrepreneur to access the capital. On the other hand, the government promise to promote the government's investment to mitigate the economic difficulty.
The recovery is said to be as soon as the 2nd quarter of 2023, of course, while the Ukraine-Russia war is one of the reasons for the recession, it's hard to predict.
Because Vietnam is still a developing countries, the demand for steel is still high for basic construction and manufacturing industries so the future is still very bright but I'm not sure some company can retain until the recovery or just go bankrupt soon.
Quangngai, November, 24th, 2022
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