Vietnam: Imported HRC prices remain strong in recent booking from India

Key Highlights:

• Indian and Chinese mills raise HRC offers to Vietnam.
• Formosa Ha Tinh to announce offers shortly. Significant hike expected.

Increased appetite among Vietnamese end-users has led to a steep hike in imported HRC offers this week. Indian and Chinese steel manufacturers have sharply raised HRC offers by around $50-100/t w-o-w.

Current week offers are:

• Indian mills are offering around $ 1,070-1,080/t CFR Vietnam, against $1,010-1,020/t CFR.
• Chinese mills are offering around $1,100/t CFR against $1,000-$1,010/t CFR .
• Japanese prices are also hovering around $1,100/t CFR Vietnam. However, very limited offers were heard in the market.

Deals reported:

a) A recent deal of around 20,000 t of Indian-origin HRC was booked for export at $1,020-1,030/t CFR for June delivery.

b) Last week, a private Indian steelmaker based in eastern India booked 20,000 t HRC at $995/t CFR for June delivery.

SteelMint analyses factors leading to an increase in imported HRC offers:

1. Higher global offers- Recently, the Chinese government announced the removal of the entire 13% export rebate on HRC coils and sheets to nil. This gives enough headroom to Chinese mills to raise HRC export offers sharply for the Vietnam market. Also, strong domestic prices gave enough confidence to raise prices in the global markets. Domestic HRC prices were recorded at an all-time high. And, currently, Chinese steel mills were heard to be offering HRCs at around $1,000/t FoB.

2. Higher realisations for Indian traders- Following the trend, Indian mills have sharply raised their HRC export offers to Vietnam for June-July deliveries. Higher realisations in exports and weak demand in domestic markets due to the announcement of lockdowns motivated mills to raise offers. Also, mills are gaining higher profit margins in exports over domestic prices, thus, raising prices weekly.

3. Healthy downstream demand in Vietnam- In Apr ’21, the Hoa Phat Group achieved a sales volume of 869,000 t of steel products, up 65% over the same period. Particularly, construction steel finished products reached 428,000 t, an increase of 59% compared to Apr ’20, of which 73,000 t were exported, 3.5 times higher than the same period last year. Also, in April, Hoa Phat supplied 212,000 t of hot-rolled coils (HRC) to the market. Specifically, in April, the volume of steel pipes sold reached 87,000 t, up 44.5% over the same period. Galvanized sheet product sales grew 55%.

Domestic steel market updates:

• Vietnam’s domestic integrated steel producer, Formosa Ha Tinh (FHS) is likely to announce a sharp hike in its monthly HRC offers for July deliveries. The company is likely to announce revised offers shortly. Offers of HRC (skin pass, SAE 1006) are expected to increase by $100 m-o-m.
• Hoa Phat, the second domestic steelmaker is also planning to revise its offers this week.

Outlook- Imported HRC offers to Vietnam is expected to remain strong from major exporting nations on optimistic demand and higher global offers.