Vietnam’s leading steel mill Formosa Ha Tinh (FHS) has reduced its monthly hot-rolled coil (HRC) offers for October and early-November 2022. Post-revision, the effective price of skin-pass HRCs (SAE1006) stands at $610/t CIF Ho Chi Minh, down $45/t in comparison with $655/t CIF a month ago.
Factors behind the price drop-
1. Fall in imported HRC offers: Offers from major exporting countries like India and China have been continuously falling amidst lack of demand in Vietnam. For instance, China’s HRC export offers for Vietnam fell by $85/t m-o-m to $585/t CFR in early-August from $670/t CFR Vietnam in early-July.
Imported HRC offers from India, too, have steeply fallen by around $80/t to $590/t CFR Vietnam in early-August from $670/t CFR seen in early-July.
2. Subdued domestic and overseas demand: Slow economic recovery post-Covid, adverse weather conditions resulting in a slowdown in construction activities coupled with decline in value-added HDG exports to the US due to inflationary pressure and to Europe due to quota restrictions have impacted the market sentiments. Vietnam’s steel export volumes dropped by around 23% to 4.85 mnt in Jan-July’22 against 6.29 mnt in the year-ago period, as per SteelMint data.
3. Production curtailment by domestic mills in July: Hoa Phat released the operational update for July a week ago. Sales volumes (including construction steel, HRC and billets) dropped by 6% m-o-m to 526,000 t in July 2022 as against 560,000 t in June 2022. Moreover, the company’s crude steel output was down by 3% to 600,000 t in July compared with 621,000 t in the previous month. Domestic steel mills decided to curtail production due to low buying interest from end-users.
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