Vietnam end-users’ sustained leaning towards domestically produced hot-rolled coils (HRC) continue to weigh on both demand and offers for imported ones. This has exerted pressure primarily on the Chinese mills, whose offers continued to fall this week after the previous week’s drop of $10-15/t. The current week’s offers for Chinese HRC (SAE1006) stand around $890/t CFR basis.
Logistical constraints keep buyers glued to domestic sourcing: The issues around availability of containers and vessels along with delivery lead time have kept buyers focused in sourcing materials domestically. Domestic steel sales in March 2022 accounted for 3.123 mnt as against 2.574 mnt a month ago, as per data from the Vietnam Steel Association (VSA).
It is to be recalled that Formosa Ha Tinh increased its prices by $20/t and is now offering HRCs (SAE1006, skinpassed) at $950-955/t CIF Ho Chi Minh City (HCMC). Hoa Phat raised its prices by $15/t to $924/t CIF HCMC.
Weak domestic demand in China may push mills to exports: Chinese mills are under pressure to sell as domestic offtake has become slow amidst the Covid surge which has also reduced export offers. Moreover, buyers in major export destinations have turned cautious about the price levels amid drop in offers this month, adding to the steel industry woes. Also, timely delivery of booked material is a worry for customers.
It is likely that the Vietnamese buyers will stick to their pattern of procurement, i.e., switch to imported HRCs after the domestic supplies dry up. Moreover, finished steel imports have remained consistent in the past three months (January-March) at around 1 mnt a month each, as per VSA data.
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