Vietnamese HRC producers are looking to cut their output in the wake of weakening imported offers, lacklustre exports and slow construction activities in the country. Domestic integrated steel producer Hoa Phat is mulling suspension of operations of two BFs in Dung Quat and two others in Hai Duong region this month. Furthermore, there is likelihood of suspension of another BF in the Dung Quat region in December. Furthermore, Formosa Ha Tinh was also heard to have cut production by 15% in the first stage, as per local media reports.
Some Chinese mills were heard to have quoted HRC export offers on the higher side amid gains in the HRC futures market. Meanwhile, a few others had withdrawn their offers until further clarity on the Vietnamese domestic mill prices.
Also, Vietnamese buyers have stood on the sidelines, closely watching out for the price announcement from Formosa Ha Tinh and Hoa Phat for the January and early February 2023 sales.
There were no firm offers heard recently from any of the exporting countries. Indian mills were heard holding back from quoting any offers.
Offers from major exporters
- China HRC (SAE1006): Last week’s assessment showed offers having dropped to $500-510/t CFR. Currently, a few indications were heard at $540-550/t CFR. An increase in Chinese SHFE HRC futures pushed mills to raise their offers.
- Japan HRC (SAE1006): Last heard offers were around $530/t CFR.
- No firm offers were heard from South Korea or India this week.
Factors impacting Vietnamese HRC market:
- Competition absent from the market: With most of the exporting countries turning inconsistent in quoting offers, the imported HRC market is losing competition. The most active countries were China followed by India. Meanwhile, offers for Indian alloyed HRCs were also not very lucrative and the 15% export duty is keeping exports of non-alloyed products in check. South Korea and Japan too have remained out of the market for most of the year and continue to remain inconsistent in quoting offers to Vietnamese buyers.
- Buyers closely track domestic mill price announcement: Vietnamese buyers too have turned cautious about booking imported HRCs. Chinese HRCs have remained lucrative mostly because they maintained consistency and remained closer to the domestic mill prices over the period of time. However, factors like delivery lead time, volatile global prices, currency exchange rate concerns, and slower demand for value-added Vietnamese products in the overseas platform weighed on the buying interest.
- Slow growth track for domestic consumption: Looking at the imports and exports data of Vietnam, steel consumption in the country seems lacklustre. Slow recovery in the domestic market earlier in the year and the continual downtrend in global HRC prices since mid-April 2022 kept the buying interest low.
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