Imported HRC offers to Vietnam from China up $20/t w-o-w despite slow demand

• Import offers for Chinese HRC rise by $15-20/t w-o-w
  
  
• Indian HRC quotes withdrawn
  
  
• Hoa Phat's steel production, sales on a decline in Nov
  
  

Chinese mills increased their HRC offers by $15-20/t this week, making it the second consecutive week of increase. This comes despite the low buying interest in imported HRCs in Vietnam. Also, the exim trade participants are awaiting the HRC price announcements for February and early-March 2023 from the major Vietnamese steel mills. The price announcement might be made in the coming few days, informed Vietnamese sources.

Current week's imported HRC offers to Vietnam:

• China: Chinese mills offered HRC (SAE1006) at $605-610/t CFR Vietnam, up from the previous week's $585-595/t CFR. Offers for HRCs (SS400) were heard around $590-595/t CFR.
  
  
• India: Indian mills opened with indications at $560/t CFR at the beginning of last week and then withdrew after raising the same to $580/t CFR towards the weekend.
  
  
• No offers were heard from Russia, Japan or South Korea
  
  

How is Vietnam's HRC market performing?

Slow steel exports hinder demand in Vietnam: Demand for HRCs and other value-added products is recovering at a very slow pace in the overseas markets, sources informed SteelMint. Vietnamese steel exports summed up to 6.39 mnt in January-October, 2022, contrasted against 10.91 mnt in the corresponding period last year (CPLY). Similarly, imports aggregated to 9.88 mnt in the same period, declining 6% y-o-y, as per data maintained with SteelMint.

Earlier in the year, the European Union (EU) had added the Vietnamese origin hot dipped galvanized (HDG) products in their quarterly quota list. This, along with the high energy cost in the EU, weighed on export trades. On the other hand, recessionary concerns and volatile global HRC prices also played a major hand in making exports challenging.

Slow domestic market sales: The domestic HRC sales have continued to remain slow amid a slower market in Vietnam. The Vietnamese steel major, Hoa Phat, reported a decline of 33% m-o-m and 13% y-o-y in the HRC sales volumes which accounted for 0.180 mnt in November 2022, as per the company's monthly performance report. This is also the second-lowest sales volume of the producer in 2022.

Hoa Phat's steel production and sales decline in Nov: One of the leading Vietnamese steel producers, Hoa Phat, has shown a decline in crude steel production and steel sales in November. In a monthly comparision, the company produced 0.384 mnt of crude steel in November, down by 30% m-o-m and 43% y-o-y, as per the company's data release. Similarly, steel sales accounted for 0.443 mnt, declining 10% m-o-m and a steeper 30% y-o-y. The company had reported shutdown of four blast furnaces in November and one more was taken down in December amid slow global and domestic market demand, as per Vietnamese media reports.

Near-term outlook: Chinese mills might continue raising their offers amid the recent gains in the futures market. The settled prices of Chinese HRC (May 2023 contract) futures on SHFE stood at RMB 4,047/t up by RMB 41/t from the previous Friday's. Also, the Chinese steel major, Baosteel, increased its domestic HRC prices today by RMB 200/t ($29/t) for January 2023 sales. Meanwhile, other exporting countries are awaiting the domestic mill price announcements which are expected to be rolled out in the upcoming days.