Steel exporters to Vietnam, along with the country’s domestic buyers, are keenly awaiting price revision announcements from domestic producers (Formosa and Hoa Phat) for November and early-December sales. This has kept most of the market participants on the sidelines.
However, offers from a few countries- especially India and Taiwan- saw an increase. China is observing a holiday today and updated offers will be available once the market resumes, informed reliable sources.
Imported HRC offers into Vietnam
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- India (SAE1006): Indications were heard at around $630/t CFR towards last weekend. Indications were around $610/t CFR at the beginning of the previous week.
- Taiwan (SAE1006): $610/t CFR, up from last week’s $590/t CFR.
- Japan (SAE1006): Previous week’s offers were at around $610/t CFR.
- China (SAE1006): $610/t CFR (from tier I or II mills), unchanged since last week.
- China (SS400): $570-580/t CFR depending upon mills.
Market condition in Vietnam
1. Higher preference for domestic HRC:
Domestically produced HRCs have garnered better demand since the beginning of 2022 as compared to imported. Hoa Phat’s sales of HRCs in August increased by 55.3% m-o-m to 233,000 t. Meanwhile, improved consumption amid increased procurement by the construction industry in Vietnam also led to a 3.8% m-o-m rise in construction steel sales at 386,000 t, as per a company press release.
Domestic steel prices have remained competitive for the past few months which have led to a higher preference among buyers. Also, Covid lockdowns till March and later the geo-political issues between Russia and Ukraine turned out to be favourable for domestically produced HRCs.
2. Import-export scenario: Imports of steel products into Vietnam stood at at 782,175 t, showing a witnessed a decline of 5.4% m-o-m in August. Meanwhile, cumulative volumes in January-August, 2022 also dropped by 5.8% y-o-y to 8.32 mnt.
In similar lines, exports volumes dropped by 5.4% m-o-m to 477,402 t in August, whereas, in January-August 2022, the same dropped sharply by 30.4% to 5.33 mnt. The major exports markets of the EU and US have been grappling with high inflation. Europe is also feeling the brunt of surging electricity prices. Furthermore, Vietnamese value-added steel products have also been brought under the country-specific quota by the European Commission. Thus, exports have slowed to these countries which are also weighing on the demand for imported steel.
3. Exporters trying to raise offers amid supply constraints
Many of the exporting countries have been seen trying to raise their offers since the beginning of September. For instance, Indian steel producers have withdrawn their offers which were lower than $610/t CFR a week ago and raised their indications this week. Meanwhile, offers from Taiwan also increased by $20/t this week.
The disruptions caused in South Korea by the typhoon Hinnamnor has led to withdrawal of export offers from Japan and South Korea. Meanwhile, with winters on the approach, China is likely to roll out its winter production cut policy for the year. These factors are going to reduce competition for countries that are actively offering HRCs for export to Vietnam.
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