Hanoi (VNS/VNA) - Although the demand for building steelrose by more than 26% in May compared to the previous month, steel pricesdecreased for the 10th month, and steelmakers expected the struggle to continue.

A monthly report from the Vietnam Steel Association (VSA) showedthat construction steel output increased by 14.18% over the previous month to812,085 tonnes, but decreased by 27.3% year-on-year.

Sales of the products in May increased by 26.08% month-on-month to927,618 tonnes but were unchanged compared to the same period last year.

Raw material prices tended to increase slightly at the end of May,with the rally extending to June. However, due to weak demand, steel producershad to gradually reduce their prices and implement subsidies.

In the domestic market, as of June 15, some steel manufacturershave lowered their prices by 100,000 VND to 270,000 VND per tonne for CB240steel coils, down to about 13.94 million VND to 14.82 million VND per tonne.They kept the same price for the CB300 rebar as compared to the latest adjustment.

Data compiled by steelonline.vn showedthat, during the period, Hoa Phat Group (HPG), the country's largest steelproducer, quoted its CB240 steel coils in the northern market at 13.94-14.82million VND per tonne, a decrease of 100,000 VND.

In the central and southern markets, the prices were at 14.04million VND per tonne and 14.31 million VND per tonne, respectively, down 100,000VND and 200,000 VND.

The company said that the falling costs of input materials andsteel billets was the cause of the decline in steel prices.

In the first quarter, Hoa Phat achieved 26.6 trillion VND (1.13billion USD) in sales, a decrease of nearly 40% over last year. Itsconsolidated profit after tax was more than 383.2 billion VND, completing 5% ofthe 2023's plan.

Despite the decline, the results were positive after losing up to 3.5trillion VND in the last two quarters.

The company said that steel production and related productscontributed 94% of profit after tax.

The selling prices have been impacted by negative sentiment andsluggish demand across global markets.

The real estate industry shows no signs of optimism as the numberof public housing projects under construction is low and the banking system istightening credit.

The sector has a huge influence on the demand for domestic steel,accounting for some 60-65% of the industry's demand.

Since the beginning of 2023, a number of policies supporting thereal estate industry have been implemented, but the market needs more time torecover, according to VNDIRECT Securities.

In addition, given attempts to increase exports, Chinese steelbusinesses are accelerating their price reduction rates to compete, addingpressure on the downtrend of steel prices in the international markets.

The General Administration of Customs of China (GACC) reportedthat the nation's steel exports in May totalled 8.4 million tonnes, an increaseof 7.6% year-on-year, the highest level since September 2016.

Overall, the first five months saw a high increase in steelexports, up 41% to 36.3 million tonnes from the same period last year.

VNDirect said that steel prices have cooled down recently, and thebearish trend is expected to continue through 2023 due to weak demand and lowerinput materials prices./.