Vietnam: Bulk ferrous scrap prices fall w-o-w amid cheaper domestic alternatives

• Vietnamese mills reduce bids for scrap amid weak demand
  
  
• Vietnam-India ties strengthen with AIFTA, opening new opportunities
  
  

Vietnam's imported ferrous scrap market faced continued pressure as weak steel sales, production cuts, and low downstream demand weighed on buying sentiment.

Mills remained hesitant to accept higher import prices due to the availability of cheaper local scrap, which was priced around VND 8,300-8,400/kg ($327-331/t) for Grade 1.

Instead, buyers preferred to source domestic scrap to reduce costs and remained largely on the sidelines, monitoring market movements and waiting for further price declines before committing to new purchases.

H2 offers for imported scrap were heard in the range of $330-335/t CFR Vietnam, but bids remained significantly lower at below $320-322/t CFR.

Deepsea cargo prices also declined, with HMS (80:20) spot prices falling $8-10/t w-o-w to $345-350/t CFR (Major East Asian countries). US-origin deepsea workable levels dropped by $12-13/t to $344-345/t CFR Vietnam, while indicative bids remained below $340/t CFR.

CFR assessments

• Deep-sea bulk US cargoes of HMS (80:20) stood at $350/t, down by $8/t w-o-w.
  
  
• Japanese-origin H2, a major tradable grade in Vietnam's scrap market, was at $327/t, dropped by $3/t w-o-w.
  
  

Market scenario

Vietnamese mills have reduced their bids for any ferrous scrap grades (H2, HMS (80:20)) to approximately $320-340/t CFR Vietnam amid dull downstream and construction demand. H2 scrap dropped to $320/t from $330/t prior to the Kanto tender, anticipating a further decline in prices in the near future.

As per current market conditions, traders observed that Vietnamese mills are unlikely to accept H2 scrap offers above $320/t CFR Vietnam.

Mill side participants mentioned that offers for heavy scrap (HS) and Shindachi were around $350-355/t CFR Vietnam, which converted to approximately JPY 45,500-46,200/t FOB Japan, factoring in freight rates of $50/t, but buying interest was estimated to be below $350/t CFR Vietnam, or JPY 45,500/t FOB Japan at most.

Formosa Ha Tinh (FHS), Vietnam's top steelmaker, cut its HRC (SAE1006, skin-pass) prices by $20/t CIF m-o-m for early Feb'25 sales, now at $516-522/t CIF Ho Chi Minh City. The move follows cheaper imports from China and domestic competition.

A Vietnamese trader noted the reduction aids end-users but isn't enough for re-rollers to maintain margins. They suggested a further $20/t cut was needed for Vietnam's galvanised coil producers to stay competitive in low-bid markets like Europe.

India and Vietnam have deepened economic relations through the ASEAN-India Free Trade Area (AIFTA), supporting India's "Act East" policy. Vietnam's growth, stability, and strategic location offer opportunities for Indian investments, especially in energy and infrastructure. As Vietnam grows wary of China, India can capitalise on these ties to diversify supply chains and strengthen regional influence.

Outlook: Looking ahead, some Vietnamese scrap buyers are expected to remain on the sidelines, anticipating further declines in spot prices in the near term. Market sources predict that spot prices will continue to weaken, driven by factors such as low government spending, delayed construction projects, and mills favouring cheaper domestic scrap over imports. As per market sources, demand is unlikely to recover or gain support in the next quarter.