Vietnam’s two major domestic integrated steel manufacturers, Formosa Ha Tinh (FHS) and Hoa Phat, have reduced their monthly hot-rolled coil (HRC) offers recently. The steel market in Vietnam has remained under pressure for a few months now with various factors impacting sentiments.
- Vietnamese integrated steel major Formosa Ha Tinh (FHS) has reportedly lowered hot-rolled coil (HRC) prices for Nov’21 deliveries by $30-35/t. Current offers for HRC (skin passes) stand at $925-930/tonne (t) CIF compared to $955-960/t CIF for Oct’21 deliveries.
- Vietnam’s leading steel producer, Hoa Phat, has reportedly announced a reduction in monthly HRC (SAE 1006) prices, sources informed SteelMint. The effective prices post-revision stands at $900/t CIF Vietnam, for Nov’21 deliveries.
Factors behind the drop in offers:
1. Subdued end-user demand amid Covid concerns: The domestic steel market has gone through a stringent lockdown phase in the past three months due to the spread of the virulent Covid-19 delta plus variant. Ho Chi Minh City (HCMC) had remained the epicentre of concern until early Sept. This largely impacted the domestic trade and sentiments.
2. Domestic consumption from downstream industries declines: Domestic consumption has taken a hit from the stringent lockdown and other trade-related hindrances. For instance, Vietnamese auto sales were slashed by 45% to 8,884 units in Jul’21 according to the Vietnam Automobile Manufacturers’ Association (VAMA). Semiconductor chip shortage along with the outbreak of the fourth wave of Covid-19 in Apr’21 impacted the operations of various plants, car dealers and repair centres of VAMA members.
3. Vietnamese mills shift to steel exports: Steel exports from Vietnam increased by 5.96% on a monthly basis to 658,207 tonnes (t) in Jul’21, as reported by the Vietnam Steel Association (VSA) earlier this month. Also, on an annual basis, steel exports spiked by 55%. Low domestic consumption and Covid-related barriers pushed mills to explore export avenues. This means economic activity will also be at a low ebb, further impacting demand in the short term. Mills, thus, have to keep scouting for export bookings to offset the lack of domestic demand.
4. Fall in imported HRC offers: Imported HRC offers from India, China and Russia have fallen by $25-30/t m-o-m.
Current week offers from exporting nations:
a. Current offers by Russian mills are at around $870-890/t CFR as against $850-860/t CFR a week back.
b. Offers of Chinese tier-II and III mills are at around $910/t CFR.
c. Indicative offers by Indian mills stand unchanged at $890-900/t CFR.
d. No firm offers were heard from Japan and South Korea this week.
Outlook
The People’s Committee of HCMC has formulated a step-by-step plan to enable the resumption of economic activities. This is likely to improve the market sentiment in the near future.
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