Vietnamese mills may reduce HRC prices for Aug-Sep as import demand slows down

• Buyers await price announcement for Aug-Sep 2022 sales
• Mills likely to reduce HRC prices, say market participants 
• Imported HRC offers remain firm, market sentiments weak
• Country-specfic quotas on HDG by EU to weigh on demand for HRCs

Vietnamese hot rolled coil (HRC) market prices continued to hover in the range similar to that in the preceeding week. Expectations that domestic mills will reduce prices for August-September 2022 are keeping buyers on the sidelines.

Last week, SteelMint had reported that  domestic producer Formosa Ha Tinh was heard negotiating one-on-one with buyers while offering a $30-50/tonne (t) discount on case-to-case basis for July and early-August sales.

On the other hand, Hoa Phat announced a second round of cuts for July and early-August 2022 sales with the revised offer standing at $775/t CIF Ho Chi Minh City (HCMC).

Bid-offer disparity
Bids from the Vietnamese buyers for imported HRCs are still at around $730/t CFR Vietnam. Uncertainty on the global HRC price direction is confusing the market participants. For instance, countries like India and Russia are trying to keep their offers low to entice buyers, while China is keeping its prices on the upside.

Meanwhile, exporters are also awaiting clarity on the price direction from the Vietnamese producers.

Chinese HRC (SAE1006) offers from mills like Benxi were heard at $750-760/t CFR Vietnam,  while offers from India keep hovering around $740-750/t CFR, mostly unchanged w-o-w. Indian mills have started offering alloyed (boron-added) HRCs for exports as the same does not fall in the ambit of the 15% duty announced by the government on 21 May.

Also, offers from ArcelorMittal, Kazakhstan were heard at $740/t CFR Vietnam.

Downstream products of Vietnamese origin to come in EU quota regime
The European Commission (EC), in its recent draft to the World Trade Organisation (WTO), has announced country-specific quotas on the Vietnamese hot-dipped galvanised (HDG) products. This is likely to impact the demand for HRCs in the market which is a substrate product for flat-rolled HDG.

“The market for HRC downstream products such as steel pipes and galvanized steel is still slow, leading to lower consumption of hot rolled coil materials compared to the same period last year and April 2022,” SteelMint learnt from a report on Hoa Phat’s official website. Moreover, the company had produced about 200,000 t HRCs in May 2022, down by 10% compared with the corresponding month of the previous year.

Near-term outlook
Slow market activities, freshly-announced EU quota restrictions on HDG exports, and focus on domestically produced HRCs amid marine logistical issues will continue to weigh on the demand for imported material. Moreover, buyers are anticipanting Formosa and Hoa Phat to reduce prices for August-September 2022 sales to boost demand.