Vietnam: HRC prices shoot up by $40-50 over last week offers

Imported HRC offers to Vietnam continue to remain bullish on higher prices from major suppliers like China, Japan, and South Korea. This surge is attributed not only to a shortage of HRC but also a strong demand among galvanized producers.

A deeper analysis shows four key reasons behind the spurt in prices-

1. Chinese mills continue to increase their export offers- The demand for Chinese-origin HRC has increased both domestically and in overseas markets, mainly in Vietnam. Further, the rally in China’s futures market has led to an increase in domestic market margins, propelling mills to raise their export offers. Nation’s HRC export offers moved up by 20-25/t w-o-w basis amid higher domestic prices.

2. Improved demand in Vietnam puts pressure on domestic suppliers- The Vietnamese domestic mills have witnessed a sudden surge in demand for HRC in the country, leading to a supply crunch. Demand for galvanizing and colour coated coils witnessed an increase for which the raw material is HRC re-rolling coil. Thus, importers are ready to make bookings at higher prices, and exporting nations are taking advantage of this amid a bullish demand outlook.

3. Absence of cost-effective offers- Inactive trades from India, as mills are focusing on their domestic market, has created a situation where Chinese mills continue to dominate the market with higher offers. In addition to this Japanese and South Korean mills are offering HRC at a premium level which is around $700-720/t CFR basis, while the Russian mills resumed, after a long pause, with offers at $690-700/t CFR basis.

4. Major domestic steel mill likely to raise HRC offers- Domestic integrated steel mill Formosa Ha Tinh is likely to announce a steep hike in its HRC prices for Feb ’21 shipments. The steel producer is expected to announce the price increase this week.

The key question is how long will this price rally continue?

The informed opinion is that, amidst bullish market trends and a positive demand outlook, imported HRC offers may witness further uptrend in the coming weeks.