Vietnam: Domestic mills cut prices; demand for imported HRC softens

The demand for imported hot-rolled coils (HRC) continues to remain slow as domestic mills reduce their prices for January and early-February 2023 sales. In the preceding week Formosa Ha Tinh (FHS) reduced HRC (SAE1006, skinpassed) prices for the said period by $38/t to $555/t CIF Ho Chi Minh City (HCMC). Later towards the weekend, Hoa Phat also announced a cut of $57/t in its HRC (SAE1006, non-skinpassed) to $542/t CIF HCMC.

Offers from major exporting nations:

• China: Few indications for HRC (SAE1006) are being heard at $565/t CFR. Last week the few quotes were heard around $540-545/t CFR. Few mills quoted higher offers while others withdrew offers amid rally in HRC futures in early few days of last week. However, the same was stalled on Thursday, 17 November 2022.
  
  
• India: No new offers are heard as of today. The government lifted off 15% export duty (announced on 21 May 2022) on 18 November 2022, after which mills have taken a wait and watch approach.
  
  

Factors impacting HRC demand in Vietnam:

1. Slow demand: The demand that has remained slow for the better part of CY2022 have made mills to reduce their prices yet again this month. As mentioned above, FHS and Hoa Phat have reduced their prices apart from the production cuts. Hoa Phat has stopped production from four blast furnaces; two BFs in Dung Quat and two others in Hai Duong region this month, and is mulling of taking down one more in December. Meanwhile, FHS also has reduced crude steel output by 15%, as reported earlier.

Low overseas demand, slow domestic construction activities and volatile global steel prices are among the prime reasons behind the drop in production levels and prices, informed sources.

2. Bid-offer disparty; domestic supplies remain lucrative: As witnessed earlier this year, Vietnamese buyers continue to prefer domestic HRCs over imported ones. Thus imports have remained slow through out the ten month period this year compared with the preceeding year. "Volatility in global HRC export offers, currency exchange rate fluctuations and low buying interest in the overseas markets are among the major issues faced by both buyers and sellers in Vietnam. Bids for imported HRCs are still being heard around sub-$520/t CFR Vietnam levels as heard a week ago," informed a Vietnam based-source.

3. Steel exports import statistics: The Vietnamese steel import and export figures are still lagging behind in January-October 2022 compared with the year ago period. Export volumes are down by 35.7% at 6.358 mnt in Jan-Oct 2022 contrasted against 9.880 mnt a year ago. Similarly, import volumes in the current year at 9.886 mnt are lower by 5.7% as against 10.485 mnt in the year ago period.

Export volumes in October at 515,290 t were down by a significant 51.6% contrasted against 1,064,994 t 2021. Whereas were largely stable in comparison with 514,600 t in September 2022. Imports volumes also were lower by 2.1% y-o-y at 821,830 t October 2022, however showed an increase of 10.6% m-o-m.

Near-term outlook:
Imported HRC market in Vietnam might see some increase in competition in the upcoming weeks with more exporting countries quoting offers, opined sources. Indian mills are likely to come up with fresh offers in the next couple of days as the government rolled back 15% export duty on non-alloyed steel products a few days back.