Vietnam’s domestic steel mill – Formosa Ha Tinh (FHS) has increased its HRC list prices sharply for Feb ’21 delivery by $95/t, SteelMint learned from its sources. This is the company’s second consecutive price hike after an increase of $25 announced last month. This comes on the back of a price surge of $100-110/t m-o-m in imported HRC offers.
Current offers of FHS
- HRC (SAE 1006, skin pass) is being offered at around $655-658/t CIF basis. The last offer was at a $560/t CIF basis.
- HRC (non-skin pass) offer stands at $650-653/t CIF basis against the last offer of $555/t CIF basis.
Factors behind price hike –
1. Hike in imported HRC offers- The demand for Chinese-origin HRC has increased both domestically and in overseas markets, mainly in Vietnam. Further, the rally in China’s futures market has led to an increase in domestic market margins, propelling mills to raise their export offers. All major exporting nations (China, Japan, Korea & CIS) have steeply increased their offers to Vietnam by $40-50/t w-o-w. Chinese mills along with Russian producers are offering at $690-700/t CFR Vietnam. While Japanese and South Korean mills are offering at a premium at $720/t CFR basis. Imported HRC prices in Vietnam have increased by $ 100-110/t m-o-m.
2. Improved demand in Vietnam puts pressure on domestic suppliers- The Vietnamese domestic mills have witnessed a sudden surge in demand for HRC in the country, leading to a supply crunch. Demand for galvanizing and color coated coils witnessed an increase for which the raw material is HR re-rolling coil. Thus, importers are ready to make bookings at higher prices, and exporting nations are taking advantage of this amid a bullish demand outlook.
Further good news on steel consumption is that the Hoa Phat Group has registered the highest ever record sales of steel pipes with over 95,000 t, up 31.2% y-o-y against Nov ’19. The company’s galvanized coil supplies to the market registered a sharp growth of 135% y-o-y at 16,900 t, Hoa Phat reported. The peak season for construction projects, the government’s public investment promotion policy are some key factors cited behind the hike in sales.
3. Absence of Indian HRC offers- Inactive trades from India, as mills are focusing on their domestic market, has created a situation where Chinese mills continue to dominate the market with higher offers. In addition to this Japanese and South Korean mills are offering HRC at a premium level which is around $700-720/t CFR basis, while the Russian mills resumed, after a long pause, with offers at $690-700/t CFR basis.
SteelMint feels that as this surge in prices is consumption driven, it could sustain for a longer period. This augurs well for the steel industry as a whole.
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