- Formosa Ha Tinh cuts prices to February 2021 levels
- Imported HRC offers to Vietnam drop to end-November 2020 levels
- Buyers await price announcement from Hoa Phat
- Interest in imported HRCs continues to remain low
Vietnamese steel major Formosa Ha Tinh reduced its offers for September and early-October sales last week, bringing the same at par with prices last seen in February and end-March 2021. Post the announcement, prices of skinpassed hot rolled coils (HRCs) (SAE1006) stand at around $655/t CIF Ho Chi Minh City (HCMC), sources informed SteelMint.
These prices are down by about $100/t against the prices intially announced for August and early-Septmember sales at $760/t CIF HCMC. However, owing to the dull demand in the country, the steel major had announced a second price reduction to $720/t CIF HCMC late last month.
Why are price declining in Vietnam?
1. Slow buying interest amongst buyers: The buying interest has continued to remain slow in the country in the last 6 months. This has been dragging down prices of both domestic and overseas HRC suppliers. The domestic steel producer, Hoa Phat, has been showing fluctuations in its sales volumes this year. For instance, the company’s steel sales volumes dropped by 12.5% to 3.991 mnt in (January-June) H1CY22 as against 4.560 mnt in (July-December) H2CY21. On a y-o-y basis, the volumes are down by 7.03% against 4.293 mnt in H1CY21.
Also, the monthly sales figure of 0.56 mnt in June 2022 is the lowest in the last six months as per the company’s monthly operations data update.
2. Imported HRC offers at over a year’s low: Imported HRC offers to Vietnam from the two active exporting countries, China and India, have also come closer to the levels last seen in November 2021. The reduction in the domestic steel major’s prices has exerted pressure on the offers from these two countries as well.
Current HRC (SAE1006) offers from major exporting countries:
- China: $600-610/t CFR from tier II mills, down $60-70/t w-o-w. Closer to $610/t assessed on 30 November, 2021.
- India: $610-620/t CFR, down $50-60/t w-o-w. This is close to the $618/t CFR assessed on 30 November 2020.
- No firm offers heard from Russia, Japan or South Korea this week.
The Chinese mills’ offers to the country have remained on a continual decline in since mid-April 2022 when the indications were around $940/t CFR Vietnam levels. Moreover the Chinese HRC futures turning volatile recently have also added to the vows. However, with improvement in steel futures today, export offers may gain some support in the near term.
In the Indian context, the 15% export duty in late May 2022 has almost stalled overseas trade activities. Since then, the Indian steel mills are scouting the market with reduced offers but to little avail, as concluding deals for boron-added HRCs have been tougher amid falling HRC prices on the global platform.
3. Buyers averting risks by not booking cheaper Russian HRCs: Buyers in Vietnam are trying to avert any geo-political risks arising out of booking HRC cargoes from Russia. A point to note is, the Vietnamese sell value-added flat steel products majorly to Europe and the US. These countries have either banned or have sanctions against Russia, since its invasion of Ukraine in late February 2022. Thus, the Russian mills’ offers, although competitive against those from other exporting countries, are not eliciting much interest from the Veitnamese buyers. Last week’s offers from Russian mills were heard at around $610/t CFR Vietnam. However, Russia’s competitive offers are impacting buyers’ interest and weighing on offers or indications from other supplying countries.
Near-term outlook
The Vietnamese buyers are likely to stay glued to domestic procurements with one major mill having cut prices. Also, buyers are awaiting price announcements from Hoa Phat which are expected in the next few days, sources informed SteelMint. Thus, amid limited buying interest in Vietnam and subdued demand globally, imported HRC offers from India and China might remain under pressure in the near term. 
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