Vietnam: Ferrous scrap imports fall 25% m-o-m in September on high prices

SE Asia’s largest ferrous scrap importer – Vietnam witnessed a drop of 25% in its monthly ferrous scrap export volumes in Sep’20. Imports stood at 0.46 mn t in Sep’20 as against 0.62 mn t a month ago, according to data maintained with SteelMint.

On a yearly basis too, import volumes fell by 34% compared with 0.70 mn t in Sep’19. The decrease in import volumes was due to the slowdown in purchases on increasing offers in end July-early Aug’20. 

Japan continued to be the largest supplier of ferrous scrap to Vietnam. Import volumes stood at 0.29 mn t in Sep’20, lower by 9% on m-o-m. Import volumes from other key suppliers such as USA and Hongkong stood at 0.08 mn t and 0.04 mn t respectively in Sep’20.

Reasons for drop in scrap import volumes

• Increased imports in Aug’20, would have resulted in sufficient inventories, leading to less restocking needs for Sep’20  
• Export prices from US and Japan also moved upward for booking cargoes for September arrival. SteelMint’s monthly price assessment for bulk H2 scrap stood at $285/t CFR Vietnam in Aug’20 (up by 7% m-o-m) and US HMS (80:20) at $295/t CFR Vietnam in Aug’20 (up by 6% m-o-m) 
• Rising domestic demand in Japan lifted Japanese scrap export prices, hence limiting bookings by Vietnam based importers. Japanese H2 purchase prices at Tokyo Steel’s Utsunomiya plant rose by JPY2250/t ($21) from the middle of July to the end of August on strong scrap demand from domestic steel mills 

 Vietnam’s steel industry overview – The production of steel products by the country in the first nine months of CY’20 fell slightly on y-o-y basis, Vietnam Steel Association reported. Construction steel and HRC output fell by 6% y-o-y. The country’s steel exports stood at 3.2 mn t during Jan-Sep’20.

Outlook – The country’s total crude steel production is expected to reach 18.34 mn t in the year CY’20, Vietnam Steel Association (VSA) predicts. However, the growth rate is expected to decrease to 5% compared to 13% in the previous year. Vietnam’s crude steel production in CY’19 stood at 17.46 mn t, according to VSA data.