Vietnam’s imported HRC market has turned quiet with buyers moving to the sidelines in expectation of mills announcing prices for December and early-January sales soon.
There are only a couple of exporting countries quoting offers at present. Chinese mills have reduced their offers post resumption of operations after the Golden Week holidays (1-7 October).
- China (HRC, SAE1006): $570-580/t CFR against previous week’s $580-590/t CFR. However, with the hike in Chinese steel prices post National holidays and surge in futures, offers may increase.
- Japan (HRC, SAE1006): $585-590/t CFR as against $610/t CFR a week ago.
- India (HRC, SAE1006): Offers floated at $620-630/t CFR. However, Indian mills are not active at present amid better realisations in the domestic market.
Factors impacting imported HRC market:
1. Limited competition: Vietnamese buyers continue to face only limited options for HRC imports ever since the beginning of this year. Japanese mills kept their focus on domestic supplies since the beginning of 2022. Later, Russian mills turned inconsistent after the Ukraine invasion in mid-February. Then, Indian mills were shackled by 15% export duty announced by the government on 21 May. Recently South Korean mills have discontinued offering HRC amid operational challenges at the hot-strip mills (HSMs) in the aftermath of typhoon Hinnamnore.
2. Lucrative prices of domestic mills: Since the country started recovering from the fourth wave of Covid in early 2022, buyers remained inclined towards domestic sourcing. Moreover, prices annonuced by domestic HRC producers, Formosa and Hoa Phat, remained competitive to those of the two active exporting nations — India and China.
Hoa Phat’s steel sales in January-September this year stood at 5.700 mnt, lower compared to 6.321 mnt in the year-ago period. Out of this, HRC sales hit 2.033 mnt in the said period, up 5% on the year.
Import volumes have dropped by 6% to 9.065 mnt in January-September as against 9.646 mnt a year ago. Also, on a monthly basis, volumes have declined by 5% at 743,038 t in September as against 782,175 t in August.
3. Vietnam’s steel exports take a hit: Exports volumes Vietnamese steel products halved in Sepember to 514,600 t from 1.156 mnt last year. Vietnam’s slow recovery from the pandemic along with higher energy costs and inflationary pressure on the major importing countries viz. the US and European Union weighed on exports. However, exports rose on a monthly basis by 8% in September.
In the first nine months of 2022, export volumes were 5.843 mnt compared with 8.815 mnt in 2021, down 34%.
Thus, slower sales momentum dented production as well as global sourcing by Vietnamese buyers.
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