Imported HRC offers to Vietnam remain firm this week despite limited buying interest. Domestic market demand continues to remain low even as exporters refrained from reducing offers on supply constraints.
Chinese mills held on to last week’s export offers for HRC (SAE1006). The gains in the Chinese futures market along with indications of reduced production volumes led to an increase in domestic prices towards last weekend which, in turn, lent support to export offers. Market particpants opine that offers will increase slightly over the next few days.
Current HRC (SAE1006) offers from major exporting countries:
- India: $590-600/t CFR, unchanged against previous week.
- Japan: $660/t CFR. There were no offers from the country last week.
- China: HRC (SAE1006) last heard offers were around $570-590/t CFR in the previous week.
- China: HRC (SS400) offer has been heard at $550/t CFR Vietnam from tier III mills, whereas $620/t CFR from tier I or II.
For the Indian HRC (SAE1006) only a few mills are offering for exports to the Veitnamese market. “There are only a few mills offering HRC for export to the region. Most of the producers are not active in the market because of export duty on non-alloyed HRC, low realisations, and limited buying interest for imports in the country,” market sources informed. Also, low interest for booking alloyed or boron added HRC for imports is also a reason that export bookings from India have taken a hit.
Slow demand in Vietnam
Domestic steel makers are also finding it difficult to book material for sales in the market. Thus, in mid-July, the domestic major HRC producers Formosa and Hoa Phat reduced their prices for September and early-October sales to $655/t CIF HCMC and $615/t CIF respectively. Also, issues around booking exports for value added flat steel products have eaten on the demand for HRCs. For instance, the major markets of USA and the European Union are posing reduced demand for Vietnamese HDG. Where the price inflation has dented demand in the USA, the inclusion of Vietnamese HDG exports in European Commission’s country specific quotas has restricted the supplies in the market.
Supply constraints to emerge
Chinese and Indian mills have started reducing their output. In China, mills have started producing less to counter the slow demand, and low margins while maintaining the push towards carbon neutrality. While in India, mills have opted for maintenance shutdowns to counter continually declining prices, and limited demand in both domestic and overseas markets. This is likely to keep the supplies of imported HRCs tight from these two countries when others like Russia, Japan and South Korea remain inconsitent in their offers.
Near-term outlook
Market participants opine that the Chinese mills are likely to increase their export offers in the next few days. Increase in Chinese futures market, and the global HRC (SS400) export offer which is being indicated around $600-610/t FOB China are the lead reasons behind the anticipation of an increase in offers to Vietnam. Along with this, supplies are also to remain tight as Indian and Chinese are curtailing their production volumes.
Leave a Reply