The explosion of iron ore prices and worries about the demand of the steel industry.
According to VDSC Weekly Market Recap, the iron ore market has exploded in recent weeks, through raising the price of steel but investors are still concerned about weak consumption prospects in 2019 of this industry.
Iron ore has been being be the world’s most commodity being watched this week while the Chinese market returns to trading after the Lunar New Year holiday. Iron ore prices in China increased continuously in the weeks close to the Lunar New Year in 2019 because of the increasing demand for stockpiles. Contrary to the expectation that prices would fall after the Tet holiday, the price of this material has continued to rise sharply due to fears of lack of supply from Brazil.
Some analysts predict that iron ore prices may reach three digits in the coming days as Chinese market begins to fully feel the impact from Brazil, which supplies 30 million tons of iron ore per year for the world.
Iron ore prices have increased continuously in the past two months, with high-quality ore prices rising by more than 30% and prices of low-quality ores rising by 50%. As soon as the 11Feb session opened, the first trading day of the Year of Pig 2019, the price of iron ore in China soared to a record.
In fact, automobile sales in China, hot rolled coil industry fell 2.8% in 2018. The real estate market is being also forecasted to weaken this year despite many projects have been still incomplete.
With both sectors, the government until now has not had any supportive actions. The government may be not to reduce auto-purchase tax and loosen the regulation of buying houses as being discussed. The risks of US and China on failing to reach commercial agreements still weigh on the psychology of consumers, businesses & investors.
Currently, fdi in Vietnam only focuses on manufacturing but not in other high value-added areas such as finance, research and development (R&D), ETC.
The proportion of FDI capital in the total development investment capital has remained at around 18-25% in the period of 1991 – 2018. FDI has still contributed an important part to perfecting the socialist-oriented market economy institution, system of policies and laws on business investment, promoting economic restructuring, etc.
Mr. Kyle Kelhofer, Country Director of the International Finance Organization (IFC) in Vietnam, Laos and Cambodia, said that FDI now focuses mainly on manufacturing but being not investing in other areas of high added value such as finance, research and development (R&D), etc.
According to him, in the new context, the advantages of cost in FDI attraction would gradually be lost, therefore, Vietnam would need regulations to attract “new generation” FDI, with better labor skills, governance, better salaries level, higher quality standards, both enhancing the competitiveness of FDI enterprises and domestic enterprises and linking these two roles together.
It is forecasted that export of rubber to the Indian market is difficult.
In 2019, rubber quantity exports to India would hardly increase strongly as in 2018 due to the slowdown of rubber consumption and domestic rubber supplies recovered in India.
According to the statistics of the General Department of Customs, in 2018, the amount of rubber exported to India reached 102.92 thousand tons, worth 145.39 million USD, up 85.6% in volume and 60.5% in value compared to 2017. Rubber export prices to India in 2018 average at USD 1,412 / ton, down 13.5% compared to 2017.
It was known that 52.1% of rubber exported to India is SVR 3L rubber, reaching 48.37 thousand tons, worth US $ 67.28 million, up 67.4% in volume and 41.3% in terms of value compared to 2017. Average export price of SVR 3L rubber to India in 2018 reached 1,402 USD/ ton, down 15.6% compared to 2017.
The Ministry of Industry and Trade forecasts that in 2019, rubber exports to India will hardly increase as much as 2018 due to their rubber consumption slowing and domestic rubber supplies recovering. The Indian government is implementing a series of measures to support their rubber farmers, including regulating imports of natural rubber and increasing import tariffs on dry rubber latex. India also has policies to encourage natural rubber production in major rubber producing states such as Kerala.
According to the World Association of Natural Rubber Producing Countries (ANRPC), India’s natural rubber consumption may slow down. According to preliminary estimates, year 2018, India’s natural rubber consumption increased by 12.6% compared to 2017 to 1.21 million tons. Indian market accounts for about 9% of the world’s total natural rubber consumption in 2018.