Vietnam: Formosa Ha Tinh raises HRC prices steeply on global cues
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Key highlights
- Company announces a significant hike of $120/t for July shipments.
- Imported HRC prices continue to rise from major exporting nations.
- Baosteel announces a steep hike in HRC prices.
Vietnam's domestic integrated steel manufacturer, Formosa Ha Tinh Steel Corporation (FHS), with an installed crude steel-making capacity of 7 million tonnes (mn t) per annum, has announced its hot-rolled coil (HRC) price policy for July shipments. The company sharply raised its HRC offers by $120/t for July delivery against the previous month's hike of around $140-145/t for June delivery.
Current offers of FHS-
- HRC (SAE 1006, skin pass) is being offered at around $1,032/t CIF basis. The last offer was at $910-912/t CIF.
- HRC (non-skin pass) offer stands at $1,027/t CIF against the last offer at $905-907/t CIF.
Following are the factors behind the steep hike in prices-
1. Removal of export rebate in HRC led to higher offers from China- The Chinese government recently announced removal of the entire 13% export rebate on HR coils and sheets. This gave enough headroom to Chinese mills to raise their export offers sharply for the Vietnam market. Also, strong domestic prices gave the mills enough confidence to raise prices in the global market. Domestic HRC prices were recorded at an all-time high. Offers from Chinese mills' are heard at around $1,100-1,110/t CFR basis as against $1,000-1,010/t CFR basis a week ago. Imported HRC offers to Vietnam recorded a month-on-month (m-o-m) jump of around $165/t.
2. Higher HRC export offers from India- Indian mills sharply raised their HRC export offers to Vietnam for June-July deliveries. Weak demand in the domestic market due to the announcements of lockdowns shifted the interest of the mills to overseas markets. Also, mills are gaining higher profit margins in exports over domestic prices. Indian mills are offering at $1,080-1,100/t CFR Vietnam against $1,010-1,020/t CFR seen in the previous week. On a monthly basis, imported HRC offers to Vietnam surged by around $135/t from India.
3. Robust downstream demand keeps market supported- Demand in the domestic market remained robust with increased demand from galvanised steel producers. Another major steel producer, Hoa Phat supplied 212,000 t of HRC in the market in Apr. The company's steel production was recorded at 869,000 t in Apr.
4. Baosteel announces a steep hike in HRC prices- China's leading steel producer, Baosteel, announced its carbon flat steel price list today for June delivery. Domestic HRC prices surged by RMB 300/t ($47) and heavy plate prices by RMB 400/t ($62).
Outlook- With rising international prices and robust growth in Vietnam's domestic demand, domestic HRC offers are expected to gain momentum in the near term. Along with this, Hoa Phat will be releasing its HRC offers shortly for July delivery.
