Imported HRC offers to Vietnam continues to trade higher on the back of supply constraints and robust demand from coated steel makers. Offers from major exporting countries increased up-to $30/t on the week. HRC offers from Japanese & Korean mills have continued to command a premium over Chinese HRC.
Factors driving imported HRC offers in Vietnam-
1. Global supply constraints- Japanese and South Korean mills have remained less active in the export market on the back of a strong recovery in their domestic demand. For instance, Nippon Steel has decided not to sell any carbon steel flats in the spot market in Jan ’21. The steel-maker is focusing on delivering the signed tonnage to buyers as the demand for flats and galvanized coils and sheets are moving up due to a robust demand from the auto sector.
Indian mills are also currently focusing on catering to improved domestic demand where they benefit from higher realizations. These factors have led to increased supply concerns in the global HRC market.
2. Higher raw material costs- The cost of raw materials such as iron ore and scrap have increased in the last few months, resulting in higher production costs, which has further affected offers from major exporting countries. Spot iron ore fines prices closed at $166.5/t CFR China towards the last weekend. The prices have increased by around $35/t m-o-m.
3. Tighter domestic supplies- Vietnam’s Hoa Phat has raised HRC offers for domestic customers by $140/t against its previous offer floated in mid-Nov ’20, sources have reported to SteelMint. Currently, the company is offering HRC at around $695/t CIF Ho Chi Minh and is selectively offering material to its customers due to limited allocations.
However, the recent decline in Chinese HRC futures has slightly turned the market sentiments to bearish. SHFE HRC futures saw a significant drop of RMB 171 d-o-d today and its May’21 contract closed at RMB 4,418/t.
Leave a Reply