Key highlights
- Imported HRC offers up by $20-30/t w-o-w
- Formosa lifted domestic HRC offers by around $65 for Mar’21
Imported HRC offers to Vietnam recorded an increase of $20-30/t this week, after remaining stable at the beginning of Jan ’21. End users have limited options to procure HRC since other major exporting nations are majorly focusing on domestic markets.
SteelMint’s analysis few factors impacting the imported HRC offers-
1.China continues to dominate the market-
The Chinese mills have continued to enjoy dominance in the Vietnamese HRC market since the beginning of Dec ’20. The gap between offers from China against other exporting nations widened as the latter started offering at higher levels. “Only Chinese mills have the export allocation for Vietnam”, shared by major HRC importers. China is the key supply offering imported HRC at around $730-740/t CFR Vietnam, which was $710-730/t CFR basis for the past couple of weeks.
2. Muted trades from India-
Indian steel mills have shifted focus to domestic sales due to robust domestic demand and higher steel prices. Thus mills are unlikely to export material to Vietnam. Limited options among Vietnam end-users in absence of Indian offers resulted in higher offers. Last Indicative offers from Indian mills are hovering at $750/t CFR but no major deals concluded yet. Also, mills are most likely to conclude deals to Europe on higher price realizations.
3. Demand supply mismatch-
Increased demand from the downstream sector and supply shortage resulted in a steep hike in prices. Vietnam & Thailand emerged as the only countries in ASEAN -6 that continue to see positive growth in their construction activities in Q3 CY’20 with 5.7% and 10.5%, respectively, as per SEAISI. Limited options to procure HRC and scarce supply from domestic mills resulted in a hike in prices.
Vietnam: Domestic market updates:
1.Formosa announced a steep hike in HRC offers
The domestic steelmaker Formosa announced a monthly hike in its HRC offers by $65/t for Mar ’21 deliveries. The company is offering HRC (SAE 1006, skin pass) at $725-730/t CIF basis while HRC (non-skin pass) at $720-725/t CIF basis.
2.Hoa Phat targets higher HRC output in CY ’21
Achieving a higher production of HRC at 700,000 t in CY ’20, with 171,000 t in Dec ’20 alone; Hoa Phat is now aiming at 2,700,000 t (2.7 mnt) in CY ’21. This comes to help Vietnam’s steel industry to be a more proactive source of raw materials for domestic enterprises, boosting export.
Outlook- Since allocation from Japanese, South Korean, and Indian mills are expected to remain on the lower side, Vietnamese buyers will have to rely on HRC imports from Chinese at higher prices.
Leave a Reply