HRC export offers from key countries to Vietnam weighed down by lower bids

• • HRC offers drop $15-30/t from major exporting countries
    
    
  • Bids received at around $570-585/t CFR
    
    
  • Buying interest takes a hit on low value-added steel exports from Vietnam
    
    
  
  
  

HRC export offer indications from major countries have dropped steeply by $10-30/t. Indian mills' export offer indications fell by $20-30/t against last week, while those from China were down by $10/t. Counter bids for current offer levels have been a challenge as buying bids are hovering at around $570-585/t CFR Vietnam levels.

Imported HRC offers into Vietnam from major exporting countries-

• • India (SAE1006): Indications are heard at around $590-610/t CFR. Last week indications were in the range of $620-630/t CFR
    
    
  • China (SAE1006): $610/t CFR (from tier I or II mills), down from $620/t CFR last week.
    
    
  • Japan (SAE1006): $610/t CFR, unchanged against last week.
    
    
  • Taiwan (SAE1006): $590/t CFR, unchanged against last week.
    
    
  • China (SS400): $595/t CFR. Last week, offers were at around $580/t CFR (from tier III mills)
    
    
  
  
  

"While Indian mills are only scouting the market for counter bids, there are no firm offers from them at present. Moreover, boron addition further adds to their vows," informed reliable Vietnamese sources. Interest for Chinese HRC has not been good recently with competitive offers from other exporting countries, they added.

Challenges that Vietnamese market is facing-

1. Inventories piling up with domestic mills: Vietnam market is witnessing rise in inventories with domestic mills even when prices were steeply reduced for October and early-November sale contracts. Domestic HRC producer Formosa Ha Tinh reduced its skin-passed HRC (SAE1006) prices by $45/t to $610/t CIF HCMC. A few days later Hoa Phat reduced prices by similar quantum for non-skin passed HRC to $595/t CIF HCMC.

Despite this, sales haven't gained any traction in the market, in turn, increasing pressure on mills as inventory is piling up. This has further weighed on the buying interest for imported HRCs.

2. Bid-offer disparity: Bids being received are at around $570-585/t CFR Vietnam while offers from exporting countries are ranging between $590-610/t CFR at present. Also, a point to be noted is that offers from India and China went up in the mid-month compared with the first week as Chinese HRC futures gained. Offers from India were increased from $592/t CFR on 1 Aug'22 to $620-630/t CFR on 15 Aug'22 while those from China increased to $625-630/t CFR from $585/t CFR in the similar timeline. This led to an increase in the gap between offers from these countries compared with domestic mills' prices and the buyers' idea of feasible price for imported HRCs.

3. Overseas, domestic demand turns slow: Sales of HRC in the Vietnamese market have been sluggish since the beginning of the year. Fewer import deals were heard in CY'22 so far even as the country parried out of the stringent third and fourth waves of Covid lockdowns spanning the entire CY'21. This has evidently turned down the volume of imports while the domestic steel majors were struggling to sell in the market and resorted to price reductions over past few months.

For instance, Hoa Phat's steel sales in July'22 were recorded at 0.53 million tonnes (mnt), down by 6.1% against the previous month and the lowest in CY'22 so far. Meanwhile, Vietnam's steel exports steeply declined by 35.9% m-o-m in July to 0.50 mnt.

Near-term outlook
Low downstream demand and confusion around the price direction on the global platform are keeping buyers on sidelines. Also, limited demand from the US and EU regions is also weighing on the Vietnamese appetite for both domestic and imported HRCs. Thus, imported HRC offers to Vientam are likely to remain under pressure in the near term, SteelMint understands.