Chinese HRC export offers to Vietnam have declined this week amid competitive prices from other exporters, price cuts announced by domestic mills, and limited buying interest. With short-selling cargoes being offered by traders, sentiments have weakened further. Supply constraints are there from both China and India, yet this did little to help support the offers from the former. However, indications from Indian mills were heard a bit higher this week.
Also the Chinese SHFE HRC futures (October contracts) declined to RMB 3,880/t today as against RMB 4,082/t a week back.
Current HRC (SAE1006) offers from major exporting countries:
- China: HRC (SAE1006) at $620/t CFR, which was around $625-630/t CFR last week.
- India: $620-640/t CFR, up from $620-630/t CFR a week ago.
- Japan: $590/t CFR, down from last week’s $610/t CFR.
- Taiwan: $590/t CFR offers were heard currently.
Factors impacting the imported HRC market:
a) Increase in competition: The Chinese HRC export offers have come under pressure because of the increased price competition. Earlier in CY 2022, the Japanese mills had remained out of the market or were offering at premium. However, the scenario has changed as domestic demand in Japan turned slow, pushing mills to sell in the overseas markets. Moreover, Taiwanese mills are also being heard to be offering in the market which had remained absent since the beginning of the year.
b) Slow demand in Vietnam: The domestic steel producers reduced their prices for October and early-November sales a week back. Slow improvement in the domestic market when the overseas demand from the US and Europe stay weakened, has pushed mills to cut their prices. Prices post revision stand at $615/t CIF HCMC from Formosa (HRC, skinpassed) and $595/t CFR from Hoa Phat (HRC, non skinpassed).
Inflationary pressure has dented the demand in both the US and Europe, while the latter is also grappling through concerns over higher power costs.
Near-term outlook
The imported HRC market in Vietnam is likely to remain under pressure in the near term as domestic mills have reduced their prices. Along with this, increase in competition from other exporting countries shall likely weigh on export offers from China and India despite the curtailed production levels in these two countries.
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