Imported hot-rolled coil (HRC) offers into Vietnam from most of the exporting countries have seen a fall of about $20/tonne (t). The country’s woes on surging Covid cases have put a dampener on market activities and demand.
“The overseas market is fairly quiet, and mills are trying to gauge at what prices they can sell. Also, there is negligible interest and no bids as everyone is shying away from being the first one to quote at a lower range,” a reliable source informed SteelMint.
Current week’s offers
a) Russian HRC offers are at $860/t CFR basis. Last week, these were at $880/t CFR.
b) Chinese tier-I mills are quoting at $970-990/t CFR basis against last week’s offers of $970-1,000/t CFR.
c) Few indications from Indian mills were at $900-910/CFR levels.
d) No firm offers from South Korea and Japan were heard this week.
What is impacting demand for imported HRC?
1. Russian mills consistently quoting lower offers: The Russian government’s export tax adjustment came into effect at the onset of Aug’21. However, offers from mills have had little impact. The mills continued quoting at around $880/t CFR for the better part of the month and reduced these further to $860/t CFR, which is cheaper by over $90-100/t against other exporting nations.
2. Dull demand: Downstream industry demand took a hit from Covid-19. For instance, low buying interest from end-consumers has dented demand for white goods for which HRC is a substrate material. As per media reports, there is a major pile-up of home appliance inventory across market channels. Steel production in Vietnam went down by 6.48% m-o-m to 2.39 million tonnes (mn t) in Jul’21, according to the Vietnam Steel Association (VSA) data. Steel sales across all categories stood at 2.10 mn t, largely stable against last month.
3. Absence of active offers from India: Indian steel mills, lately, have been less active in searching for export opportunities in the Vietnamese market.
“We heard that a few Indian mills are unofficially testing at lower price points of $915 CFR, but price indications are around $900/t CFR,” a reliable trade source said.
4. Surging Covid-19 cases restrict activity: The lockdown has been extended till 4 Sept’21 from today, 23 Aug. The country’s Ministry of Health has been reporting over 11,000 new Covid cases for the last four days. There were around 4,193 new cases reported in Ho Chi Minh City (HCMC) on 22 Aug. The government has announced the lockdown extension with more stringent norms to contain any further spread. Vietnam’s plan to prohibit residents of Ho Chi Minh City from leaving their homes from Monday has triggered panic buying in the epicentre of its worst coronavirus outbreak.
On the other hand, slow buying in the domestic markets of major exporting nations have pushed them to find opportunities in the overseas markets.
Will imported HRC offers remain under pressure?
Summarising the Vietnamese market scenario, it is likely that imported HRC offers will continue to remain under pressure in the near term. The extension and more stringent regulations around the Covid-19 induced lockdown, and restrictions on manpower availability at work or sites will keep market activities on a leash till 4 Sept’21.
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