Key highlights:
- Imported HRC offers increased by $20-25/t w-o-w
- Chinese futures increase post CNY holidays
- Uncertainty continues over Chinese export rebate cut rumours
- Hoa Phat HRC production reaches 1 mn t
This week imported HRC offers to Vietnam reported an increase by around $20-25/t on weekly basis as compared to last Monday. SteelMint’s assessment for HRC (SAE 1006) stands at $690-710/t CFR Vietnam basis which was around $670-710/t CFR last week. Vietnam market started rebounding on an uptrend in Chinese HRC futures.
However, market sentiments remained bearish since importers are cautiously returning to the market post-Tet holidays. Buyers are bidding around $680-685/t CFR basis for Mar-Apr shipments. Thus, no major deals concluded yet.
“Vietnamese buyers were silent on higher offers from China, preferring to wait for more offers this week from Indian and other exporting countries”, SteelMint understands from Vietnam market participants
Reasons driving imported HRC offers:
1.Surge in Chinese futures- Rebar futures gained by RMB 58 and HRC futures by RMB 132, as per SteelMint’s assessment. SHFE HRC closing futures on 22nd Feb’21 stood at RMB 4,822/t which was RMB 4,690/t on 19th Feb’21
2.Higher offers from China post CNY holidays-
Chinese tier 2 mills were heard to be offering at $690-700/t CFR and tier -1 mills are offering around $710-720/t CFR basis. Last week, tier 2 mills were offering around $670-690/t CFR basis. Hike in domestic prices resulted in an increase in HRC export offers to Vietnam.
3.Indian mills resume HRC offers to Vietnam-
Few Indian steel mills are heard to have lowered HRC offers to Vietnam at around $710/t CFR basis. However, a major private steel mill based in Western India has quoted HRC offers at around $740/t CFR basis. Indian mills resumed HRC exports to Vietnam on bearish sentiments in the domestic market.
What may happen?
- China likely to slash export rebate cut-
Anticipated cut in export rebates to 9% from 13% has led to higher HRC export offers from major Chinese steel mills. Chinese Govt. is planning to make this move to curb steel output, decrease exports and utilize the material domestically. Due to these measures, few mills have introduced a new clause of loss to be borne partially or fully by the buying party in case the rebate cut is enacted by the government. Thus, due to this uncertainty, importers in Vietnam are preferring to wait and continue to remain silent. - Hoa Phat’s HRC production volume surpasses 1 mn t-
Hoa Phat Group has reported that its hot-rolled coil (HRC) production volume has reached 1 mn t from its Hoa Phat Dung Quat Steel after more than 9 months of commissioning. In CY’20, the company produced 700,000 t and for CY’21, it has set a target of achieving 2.7 mn t HRC.
These factors may reduce reliance on imports over domestic HRC. Also, this may result to decline in imported HRC offers and dull sentiments in near term.
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