Vietnam’s steel major, Formosa Ha Tinh (FHS), today reduced its hot-rolled coil (HRC) prices by $17/t m-o-m for December 2022 and early-January 2023 sales.
Post-revision, FHS’s offer price for HRC (SAE1006, skinpassed) stands at $593/t (VND 14,320,000/t) CIF Ho Chi Minh City (HCMC) compared with the level of $610/t (VND 14,470,000/t) CIF announced for November and early-December sales a month ago. “The market conditions are not that good at present amid monsoon’s seasonal impact and global HRC prices have also come under pressure recently,” informed reliable sources. Also, weakening of the Vietnamese currency dong against the dollar is another factor, they added.
Factors behind drop in offers
1. Drop in imported HRC prices: Chinese mills were heard offering HRCs (SAE1006) at around $570-580/t CFR against the previous week’s $580-590/t CFR. This was around $610/t CFR toward mid-September.
South Korean and Japanese mills were also heard offering HRCs at around $600/t CFR amid strengthening of the dollar against the home currency.
Indian mills continue to remain shackled by the 15% export duty on non-alloyed flat steel products since end-May 2022. Meanwhile, Indian mills have shifted focus to the higher realisation being fetched in the domestic market. However, Indian mills were heard to be testing the market with offers of around $610-620/t CFR, SteelMint learnt from trade market sources recently.
2. Drop in Vietnam’s steel exports: Vietnamese steel market has witnessed limited activties from the overseas trade perspective. Exports of steel products dipped 34% y-o-y in January-September 2022 to 5.843 mnt compared with 8.815 mnt in 2021. Moreover volumes dropped by 56% y-o-y to 515,000 t in September 2022. Moreover, the Vietnamese hot-dipped galvanized products have been added to the European Commission’s country specific quota since April 2022, limiting export volumes. This has also impacted the buying interest amongst downstream steel processors.
3. Domestic end-users continue to prefer domestic HRCs over imported: The inclination of buyers towards domestic prouducts since the beginning of 2022 has weighed on import volumes. Imports in the first nine months of 2022 were down by 6% to 9.065 mnt as against 9.646 mnt in the year-ago period. Furthermore, import volumes have been on a continual decline since May 2022.
Meanwhile, Hoa Phat’s domestic HRC sales have remained mostly above 200,000 t in 2022 barring July when it dropped to 150,000 t. In the first nine months of 2022, sales volume aggregated to 2.033 mnt, up by 5% against the same period of the previous year. However, the same dropped by about 2% in September to 228,000 t as against 233,000 t in August. Also market activities are slow at present amid the ongoing monsoon season (June-September) which is weighing on the demand for domestic steel.
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