Vietnam’s imported HRC market witnessed a price correction in a deal reported from India last week. An Indian mill had booked 30,000 tonnes (t) of HRC cargo for Aug’21 delivery towards last weekend at $915-920/t CFR Vietnam, down from the mill offers of $940-950/t CFR during the previous week.
Current week’s offers-
- Indian mills are offering at $915-930/t CFR basis.
- Chinese mills’ offers are flat at $920-930/t CFR.
- Japanese mills resumed offers at $1,050/t CFR after a four-week gap.
- No offers from Russia have been heard this week.
Why are imported HRC offers under pressure?
1. Impact of Covid waves in South East Asia- The South East Asian region witnessed hurdles in both demand and trading due to the resurgence in Covid-19 cases in late-Mar’21. Most of the countries in the region are under lockdown and following stringent regulations to curtail the spread of the disease which is leading to lower domestic and international trading volumes.
2. Cheaper Russian cargoes weigh on imported HRC offers- Russian mills had booked positioned HRC cargoes to Vietnam at $850-860/t CFR, as per a SteelMint report on 5 Jul’21. This occurred after the announcement of an export tax @15% to be levied from 1 Aug’21 by the Russian government on certain steel products. However, this had weighed on the market sentiments in Vietnam and also pushed other countries to slash offers.
3. Awaiting clarity on export tax from China- Vietnam’s imported HRC buyers moved to the side lines as the market was abuzz with talks of the Chinese government’s intent of levying an export tax after the removal of export rebate @ 13% in mid-May’21. Offers to Vietnam also increased slightly for a few succeeding weeks but then dropped on diversion of interest towards domestic procurement.
Vietnam’s major domestic integrated steelmaker, Formosa Ha Tinh, is planning to announce its offers shortly. However, it is assessing the current situation before announcing appropriate price levels, SteelMint learned from credible sources. Thus, buyers are waiting for the official price announcement by the domestic steel mills, mainly Hoa Phat and Formosa Ha Tinh for Aug –Sep’21 shipments. Till then, they have adopted a wait-and-watch stance and will procure the material accordingly.
Outlook-
The severity of the regulations in curtailing Covid-19 in Vietnam may impact trading. Further, Vietnamese importers are trying to reduce reliance on imports and focusing more on domestic supply. During Jan-May’21 Vietnam’s steel production increased by 39% to 13.40 million tonnes (mn t), as per Vietnam Steel Association.
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