Vietnam: Imported scrap market mute on sluggish finished steel demand

Vietnam’s imported scrap market remained largely firm on the back of sluggish finished steel demand in the domestic and overseas markets. The market was muted with no major activities recorded throughout the week. However, imported scrap prices continued to fall on limited bids.

Japanese suppliers are looking for higher bids but buyers are hardly interested in raising bid levels. Other leading Japanese scrap buyers like South Korea, Taiwan and Bangladesh are on the sidelines due to negative market sentiments.

• Fresh indicative offers for Japanese H2 are at $380-390/t CFR levels; however, no firm deals were heard. Buyers are not ready to take risk due to the weakening Vietnamese Dong.
• Offers for bulk US-origin HMS 1&2 (80:20) scrap were at $370-375/t CFR, unchanged w-o-w.

Industry insiders believe that imported scrap prices will move down further, owing to weak domestic market movement and demand remaining slow. Meanwhile, heavy rainfall and typhoons have kept the market muted.

Domestic scrap prices down further: Domestic scrap prices remain supportive for many mills as prices moved down further. H1 grade scrap prices were at VND 9,500/kg, while H2 scrap prices stood at VND 9,200/kg, down by VND 300/Kg w-o-w. However, finished steel demand remained soft, and hence scrap prices remained under pressure.

Vietnam’s billet export offers drop w-o-w: Vietnam’s BF-grade billet export offers stood at around $535/t FOB, a decrease of around $10/t FOB w-o-w. Falling scrap prices and modest demand for finished steel in the region weigh on billet export offers.

Overview of other SE Asian scrap markets

• Indonesia: Imported scrap offers for Australia-origin HMS 1/PNS were at $415-420/t, CFR Jakarta, mostly unchanged w-o-w. Meanwhile, Hong Kong-origin PNS was at $430-435/t CFR Jakarta, down by $5/t w-o-w.
• Thailand: Central America-origin HMS 1&2 (70:30) was offered at $315/t CFR. Meanwhile, from the same origin around 2,000 t of HMS 1&2 (60:40) was heard sold at $300/t CFR towards last weekend.
• Taiwan: Taiwan’s imported scrap prices for Australia-origin HMS 1&2 (80:20) stood at $345-350/t CFR Taichung, unchanged w-o-w.

Outlook: Market participants believe the tide may turn after China’s 10-day national holidays till 10 October. Hence buyers and steelmakers are likely to wait for further clarity on market direction.