Vietnam’s domestic steel mill Formosa HaTinh (FHS) has increased its HRC list prices sharply for Mar ’21 delivery by $65/t, SteelMint learned from company officials. This hike is made on the back of higher imported offers from China.
Current offers of FHS
- HRC (SAE 1006, skin pass) is being offered at around $725-730/t CIF basis. The last offer was at a $655-658/t CIF basis.
- HRC (non-skin pass) offer stands at $720-725/t CIF basis against the last offer of $650-653/t CIF basis.
Factors behind price hike –
1. Hike in imported HRC 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. Major Chinese steel mills namely Benxi steel and Baosteel are offering HRC to Vietnam at around $730-740/t CFR basis. Meanwhile Rizhao steel is offering around $690/t CFR basis. Offers have reported a significant jump of around $110/t m-o-m basis
2. Improved demand in downstream sector-
Vietnam, the major galvanized and color-coated exporter has witnessed a hefty demand for imported HRC. This prompted buyers in Vietnam to procure material at higher prices.Hoa Phat Group registered a sharp growth of 135% y-o-y at 16,900 t galvanized coil supplies to the market, as per Vietnam Steel Association (VSA).
Vietnam & Thailand emerged as the only countries in ASEAN -6 that continues to see positive growth in their construction activities in Q3 CY’20 with 5.7% and 10.5%, respectively, as per SEAISI.
3. Mute trades from India –
Indian steel mills have sifted focus to domestic sales due to robust domestic demand and higher steel prices. Thus mills are unlikely to export material to Vietnam. Thus Chinese mills continue to dominate the market with higher offers. Limited options among Vietnam end users on absence of Indian offers resulted to higher offers from Formosa.
4. Supply shortage –
Major domestic players mainly Formosa Ha Tinh and Hoa Phat are facing a shortage of HRC supplies in the domestic market due to increased demand.
Towards the end of Dec’20, Vietnam’s Hoa Phat had raised HRC offers for domestic customers by $140/t against its previous offer floated in mid-Nov ’20, sources have reported to SteelMint. The company was offering re-rolling grade HRC at around $695/t CIF Ho Chi Minh for Feb deliveries and was selectively offering material to its customers due to limited allocations. Thus demand supply mismatch resulted to price hike
SteelMint identifies these factors on steep hike of HRC offers by the company. Also we anticipate this hike will remain supported on the back of strong sentiments hovering in global steel market
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