Vietnam’s domestic integrated steelmaker, Formosa Ha Tinh (FHS), has cut its offers for hot-rolled coils (HRC) by $15/tonne (t) m-o-m for Oct’21 deliveries. Currently, the mill is offering HRC (skin pass) at $955-960/t CIF Vietnam, which was around $970/t CIF for Sept’21 shipments. Meanwhile, offers for non-skin pass HRC stand at $950-955/t CIF basis.
In the previous month, the mill had steeply reduced its offers by around $60/t for Sept’21 deliveries.
Factors leading to the decline in HRC offers
1. Low-priced HRC imports from Russia- Towards the beginning of the week, Vietnamese buyers had booked around 60,000 t of HRC from Russia at discounted price levels of $905-910/t CFR Vietnam. The shipment pertains to mid-Nov’21.
2. Cheaper imported HRC offers- Since mid-Jun’21, imported HRC offers have remained consistently lower than those of domestic HRC prices. Furthermore, current offers from India stand at around $925-930/t CFR. However, no deals have been concluded yet. Few price indications were even heard at around $910/t CFR levels.
On the other hand, offers from China have been limited amid low preference from Vietnamese buyers on export tax announcement concerns. Also, Chinese mills have limited allocations for exports amid ongoing production curbs.
3. Covid-19 and monsoon weigh on trading activities- The seasonally weak demand period of the monsoon was further impacted by surging cases of Covid-19 in the country resulting in the imposition of lockdown. The steel hub of Ho Chi Minh City (HCMC) has remained the centre of concern since cases started spiking in May’21. There were 9,667 new cases reported on 12 Aug’21 in HCMC and the adjoining industrial provinces of Binh Duong and Dong Nai, as per media reports.
Vietnam’s HRC market will remain dull due to increased Covid cases and frequent lockdowns. Hoa Phat, the Vietnamese steel major, has reported that the sales volumes for HRCs got slashed by 30% to 160,000 t in Jul’21 over 230,000 t sold in Jun’21, signifying weaker end-user demand.
Outlook
The situation in Vietnam remains tense amid the ongoing stringent lockdown in the major industrial hubs. Furthermore, HRC prices may continue to weigh under the seasonally weak demand.
“The market situation is bearish at present, and might continue further due to the extension of the lockdown until end of the month. However, there is a possibility that Russian mills could now sell at $880-890 CFR levels,” said a reliable Vietnamese source when asked for a market outlook.
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