Vietnam: Imported HRC market quiet as end-users await price correction from domestic mills

The imported HRC market in Vietnam remained unchanged last week due to the disparity between bids and offers. Also, the trade momentum for imported HRCs was slow as the countries were celebrating holidays. Current offers from major Chinese mills are hovering around:

• HRC (SS400)- $810-820/t CFR Ho Chi Minh city (HCMC)
• HRC (SAE1006)- $840-850/t CFR HCMC

On the contrary, Vietnam’s end-user industry is showing some reluctance and has been bidding at around $790/t CFR levels for Chinese HRCs.

Meanwhile, no offers from other exporting nations have been heard yet. This could be because of-

• Lower realisations in Vietnam market: Indian steel producers opted out from exporting HRCs to Vietnam on lower realisations since the beginning of March 2022. For instance, Indian HRC (SAE1006) offers stood around $950-980/t CFR UAE and HRC (S275) at $1,100-1,140/t CFR Europe in the preceding week, which were quite higher in contrast with prevailing offers in the Vietnamese market. On the other hand, a major steel mill announced HRC list prices at around INR 76,000-76,500/t ($981-987/t) exy-Mumbai, exclusive of GST @ 18% for early-May sales.
• Strong downstream domestic demand in Japan, South Korea: Increased demand from domestic shipbuilders in South Korea along with renovations at POSCO’s Gwangyang steel works resulted in increased domestic consumption. Thus, Korean mills have not released fresh offers to Vietnam this week. Meanwhile, demand in Japan is also robust from the shipbuilders which is keeping the mills from actively offering HRCs for export to the Southeast Asian countries.

Short-term outlook:
Domestic steel majors, Formosa and Hoa Phat will announce their price policy for July and early-August sales in the upcoming days. Last month, Formosa Ha Tinh increased its prices by $20/t and was offering HRCs (SAE1006, skinpasses) at $950-955/t CIF Ho Chi Minh City (HCMC).

Thus, the market participants opined that mills will reduce their prices following the downtrend in the Chinese HRC export offers. Furthermore, increased preference for domestically produced HRCs is likely to continue weighing on demand for imported material in the near term.