Vietnam: Bulk ferrous scrap prices remain largely stable w-o-w due to limited buying activity

• Mills cap inventories amid weak demand
  
  
• Wide bid-offer gaps discourage trades
  
  

Vietnam's imported scrap market was quiet during the week, as trading activity slowed ahead of the year-end. Offers for Japanese H2 scrap were steady at $325-335/t CFR Vietnam, while bids stayed below $320/t CFR, reflecting a cautious stance among buyers amid subdued sentiment. Mills showed limited restocking interest, citing weak demand for finished steel and a focus on maintaining low inventories.

US-origin deep-sea scrap offers held firm at $350-355/t CFR Vietnam, but buyer interest was lacklustre due to high procurement volume requirements and perceived cost risks. There continued to be a wide bid-offer gap, further discouraging transactions in the imported scrap segment.

In contrast, domestic H2-equivalent scrap prices stood at VND 8,550-9,100/t ($336-357/t) and VND 7,900/t ($310/t) across northern and southern Vietnam, with market participants suggesting these prices have likely bottomed out and may see some short-term stability.

Mills continued to operate at reduced rates of 40-50%, balancing production needs against market uncertainties. Additionally, financial instability and geopolitical concerns, including US-China trade tensions, led to a conservative approach among mills.

The construction sector, typically a driver of demand, is expected to gain momentum only after the Lunar New Year, though this year's outlook remains cautious. Notably, the construction season in Vietnam typically runs from February to July, ending before the rainy season begins.

CFR assessments

• Deep-sea bulk US cargoes of HMS (80:20) stood at $352/t, stable w-o-w.
  
  
• Japanese-origin H2, a major tradable grade in Vietnam's scrap market, was at $322/t, a drop of $2/t w-o-w.
  
  

Market scenario

A market participant stated, "Vietnam's scrap market is much weaker than usual, influenced by an unstable financial situation and the expected volatility from the US-China tariff conflict. Typically, the market recovers after the Lunar New Year, with mills beginning to restock. However, the current situation is unusual, and mills are adopting a cautious approach, operating at lower capacity."

A Vietnam-based mill-side participant highlighted, "Domestic scrap prices have bottomed out and are less volatile than imported scrap prices. Imported scrap prices would need to fall significantly more to impact domestic prices, but this will not happen in the short term."

Domestic mills in Vietnam were reported to be clearing their finished steel inventories by maintaining competitive prices, which could place downward pressure on H2 tags in the near term.

Echoing these sentiments, a trader stated, "Mills are under pressure to sell at the end of the year to generate cash. They will likely keep H2 scrap prices low. However, the market is expected to remain slow. Mills will continue to buy, but they will not stockpile much."

Another trader noted, "In the domestic market, Vietnam's downstream sectors are experiencing weak demand for HRC from both local and international buyers. The construction sector is particularly slow, and exports of galvanised coil remain limited."

Outlook

Looking ahead, many market participants are expressing a bearish outlook for 2025. A Vietnamese trader stated, "There will be some buying activity from mid-January, but it will slow down again before the Lunar New Year." Some market participants believe that domestic scrap prices in Vietnam have reached their lowest point and are unlikely to decrease further in the near future.