Extension of the lockdown in Vietnam and related disruptions weighed on imported HRC offers into the country. However, earlier this month, importers had concluded a few deals with Russian mills at cheaper offers.
Imported HRC offers this week:
1. Offers from Chinese tier II mills are at $970-1,000/tonne (t) CFR basis.
2. Indian mill offers continue to hover at $925-930/t CFR.
3. Russian mills are offering at $880/t CFR.
4. No firm offers were heard from Japanese and South Korean mills this week.
Imported HRC offers to Vietnam were impacted by the following factors:
a. Uncertainty regarding China export tax adjustment: Amidst concerns in the Chinese market over a lack of clarity on an export tax levy and the contract clause stating ‘consequent losses to be shouldered by buyers’, the Vietnamese importers are considering other cheaper avenues. Also, there are limited allocations for exports from the Chinese mills because of the ongoing production curbs.
b. Cheaper Russian cargoes turn sentiments bearish: Last week’s export deal from Russia of 60,000 t of HRC at $905-910/t CFR Vietnam for mid-Nov’21 shipments, has weighed on market sentiments. Although other countries are offering higher than the above-stated levels, the Russian mill’s offers continue to remain competitive, despite the 15% export tax coming into play since the beginning of Aug’21.
c. Formosa cuts domestic HRC offers for Oct delivery: Vietnamese steel major Formosa Ha Tinh (FHS) has cut its offers by $15/t for Oct’21 shipments after factoring in dull domestic demand and competitive imported HRC offers. Last week, the company had announced its offers for HRC (skin-passes) at $955-960/t CIF Vietnam for Oct’21 deliveries.
d. Seasonal lull and Covid-19 concerns: The seasonal lull during the monsoon was further fuelled by the spiking Covid-19 cases. This led to stringent lockdowns in the country in early July which has been consistently extending since then. Recently, the Vietnamese government has extended the lockdown in Ho Chi Minh City (HCMC) until end-Aug’21. Both, material logistics and human movement have been severely impacted in HCMC and surrounding industrial hubs.
Outlook:
Demand for HRC in the Vietnam market may remain dull in the coming few weeks. “Market sentiment has remained bearish since the beginning of Aug due to stringent lockdown. This trend might continue on the recently announced extension of the same until end –Aug’21. Also, FHS has reduced its Oct’21 delivery prices by $15/t,” informed a reliable source when asked about the market dynamics.
Leave a Reply