Vietnam: Formosa takes up Baosteel cue, rolls over Aug HRC offers

Vietnam’s domestic integrated steel manufacturer Formosa Ha Tinh Steel Corporation (FHS), with an installed crude steel-making capacity of 7 million tonnes (mn t) per annum, rolled over its hot-rolled coils (HRCs) prices for Aug’21 deliveries. Last month, the company had sharply raised  HRC offers by $120/tonne (t) for Jul’21 deliveries.

Current offers –

• HRC (SAE 1006, skin pass) is being offered at around $1,032/t CIF basis.
• HRC (non-skin pass) offers stand at $1,027/t CIF against the last offer at $905-907/t CIF.

Reasons behind stability in  offers- 

 1.Baosteel’s HRC prices stable-China’s leading steel producer, Baosteel Group, rolled over its carbon flat steel prices for Jul’21 deliveries . The company had increased HRC prices by RMB 300/t ($47) and heavy plates by RMB 400/t ($63) for Jun deliveries last month.

2.Increased Covid cases in Vietnam- Due to a surge in Covid cases in Vietnam along with the upcoming rainy season, demand for HRCs is relatively low. Vietnam discovered a new coronavirus variant that’s a hybrid of strains first found in India and the United Kingdom, the Vietnamese health minister said on Saturday (5 Jun’21), SteelMint learned from market reports.

3.Rerollers reduce dependence on imports- Domestic offers are cheaper than imported HRC offers from India and China.Indian HRC export price indications are at around $1,020-1,030/t, CFR basis, for Jul and Aug shipments. Chinese steel mills are offering HRCs at around $985-990/t, CFR.

Vietnamese steel major Hoa Phat Group recorded steel sales at 695,000 t in May’21, a decrease of 20% m-o-m against 869,000 t in Apr. Exports of various steel products stood at 324,000 t in May, of which 52,000 t were steel billets. Sales of hot-rolled coil (HRC) were at 225,000 t.

4. Rumours of China imposing export tariffs- There have been rumours in the market that China may announce an export duty on flats soon. This has kept buyers away from booking material. Thus, the nation’s HRC export offers to Vietnam continue to remain volatile. This has led to an increased preference for domestic HRC.

Near-term outlook– Vietnamese re-rollers are likely to increase their preferences for domestic HRC due to continued uncertainty on export tariff adjustment by the Chinese government. Also,  Lower HRC export offers to Vietnam and exhausted HRC import quota to Europe have shifted the focus of Indian steel mills to the Middle-East and Turkey.