Vietnam: Formosa Ha Tinh lowers monthly HRC prices by $100/t for Aug’22 sales

Formosa Ha Tinh (FHS), Vietnam’s leading steel producer, has steeply reduced its monthly hot rolled coil (HRC) offers for August 2022 sales, sources informed SteelMint. Current offers for skin-pass HRCs (SAE1006) stand at $755-765/t CIF Ho Chi Minh. The prices have come down by around $100/t against those announced last month.

SteelMint analyses factors behind the drop

1. Drop in imported HRC prices: Major parts of China were observing Covid-induced lockdowns since mid-March. Thus, demand for steel in the domestic market remained dull. As a result, Chinese mills started looking for exports to offload increased inventories at much lower offers. China’s steel exports in May 2022 rose a sharp 47.2% y-o-y to 7.76 mnt.

For instance, China’s HRC export offers dropped by $35/t m-o-m from $792/t CNF Vietnam during May to $755/t CNF in early-June.

2. Subdued demand pushes mills to offer discount on previous offers: 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).

3. 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 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 of HRCs in May 2022, down by 10% compared to the corresponding month of the previous year.