Vietnam: Muted market drags imported HRC prices down by $20

The Vietnamese HRC market has remained mute amid absence of active trades since buyers are waiting for a clear direction of Chinese price trend. Also, importers have adopted a wait-and-watch mode and anticipate further fall in HRC offers. “The market remained slow and quiet“, shared by Vietnam importers to SteelMint

Notably, Chinese mills cut their offers to $710-730/t CFR Vietnam, which was at $730-740/t CFR basis a week back. Few traders were even heard of selling position HRC (SAE 1006) cargoes at around $685-690/t CFR Vietnam levels.

Market remains quiet due to:

1.Chinese New Year looming ahead
The Vietnamese buyers had adopted a wait-and- watch mode due to upcoming holidays from 11 Feb ’21 which marks the Chinese New Year. Thus Chinese mills may lower their offers in order to ease out the inventories before festive holidays.

2.Limited options in overseas markets
India, Russia, South Korea and Japan are less likely to export to Vietnam since they are quoting higher offers. Rising domestic consumption in these countries has led to reduced interest for exports. Thus Vietnam buyers are totally dependent on Chinese steel makers for HRC imports. Limited HRC (SAE 1006) price indications for South Korean HRC was heard at $780/t CFR Vietnam basis.

3.Demand-supply mismatch
The HRC consumption has surged in Vietnam with an increase in demand from galvanized and other upstream products in the country. Domestic producers- Formosa and Hoa Phat have limited production capabilities to quench this rising demand, leading to an increased preference for imported HRC. However, Hoa Phat is bullish about producing 2.7 mn t of HRC in CY ’21, after achieving a production of 0.7 mn t in CY ’20.

4.Importers eyeing cheaper material
The Vietnamese importers have been eyeing cheaper alternatives but with most of the exporters cutting their export allocations, they are left with very few options. Thus, amid surging global prices and limited options, the importers are bidding low in anticipation of a decline in HRC prices in the short-term.

Outlook-
Imported HRC offers are expected to decline in the near-term following decrease in offers from China. Also, importers in Vietnam are looking forward to conclude HRC import deals at competitive prices.