Posted on 26 Sep 2024
The trade protection measures from the US and the EU were expected to pose short-term challenges for Nam Kim Steel Joint Stock Company (NKG), but its export activities should remain stable in the medium term.
As of the second quarter of 2024, the company's inventory was stable at VND 5.873 trillion, despite a 21% average decline in hot-rolled coil (HRC) prices since July, which might increase the pressure for inventory write-downs.
KB Securities Vietnam (KBSV) predicted that if HRC prices stabilize, Nam Kim's gross profit margins could improve in the fourth quarter of 2024. The company is actively managing its inventory levels and has reduced its material turnover days significantly.
While the US and EU markets, which account for over 80% of Nam Kim's exports, are tightening trade barriers, long-term prospects remain positive due to lower import tariffs for Vietnamese steel compared to Chinese steel.
Additionally, domestic consumption is recovering, with notable increases in galvanized steel and pipe consumption, suggesting a potential growth in demand as the construction sector enters its peak season. KBSV estimated Nam Kim's total consumption will reach 1.04 million tons this year, a 22% increase from 2023.
Source:Yieh
