Vietnam: H2 scrap import offers from Japan hit four-year low amid weak demand

Vietnam's imported scrap market witnessed a continuous drop in prices throughout the week, driven by weak demand and global market pressures. Japanese-origin H2 scrap prices hit a nearly four-year low, sinking to around $330-340/t CFR. Despite narrowing bid-offer spreads and some returning interest, no significant deals were concluded.

This week, flooding and production stoppages from heavy rains tightened domestic scrap supply in Vietnam, briefly fuelling some import interest. However, weak demand for finished steel, particularly rebar and wire rods, heavily impacted the market. Additionally, price cuts from Japanese suppliers, driven by oversupply and sluggish export demand, pushed prices further down.

Market participants expressed concerns about the impact of these price cuts, with a Japanese trader stating, "Due to the downturn in Japan's market, Vietnamese buyers will retreat too."

A mill source echoed this, stating, "The operation rate of electric-arc furnaces is extremely low, and it makes no sense to import scrap at this time."

Meanwhile, workable levels for US-origin HMS (80:20) bulk were in the range of $345-350/t with offers at $355-360/t CFR Vietnam, but buying interest remained weak due to competitive prices of Japanese scrap, large volume requirements, and long delivery times.

Assessments

• The weekly assessment for US origin bulk HMS (80:20) CFR Vietnam stood at $351/t, down by $9/t w-o-w.
  
  
• The weekly assessment for Japanese-origin bulk H2, a major tradable grade in Vietnam's scrap market, was down by $12/t to $336/t CFR.
  
  

Domestic market

In Vietnam's domestic steel market, prices of finished products remained stable, but margins for flat steel were tight, which caused major steelmakers to hold long product prices steady. However, traders expect price cuts once margins improve.

Scrap prices in the south were stable at VND 8,500-8,600/t ($346-350/t), while local scrap in the north is expected to see a drop in prices due to increased supply following Typhoon Yagi.

Market participants expect scrap collection efforts to drive prices down soon.

As per market insiders, "Vietnam's hot-rolled coil (HRC) import prices are up in the air because of changing prices from China. Tight steel product margins have driven leading major mills to keep long product prices steady. However, if margins improve, long steel producers might reduce prices to extend their market share."

A leading Chinese trader highlighted that Chinese HRC prices to Vietnam are influenced by the potential for retroactive anti-dumping duties due to an ongoing investigation. "Customers are interested in buying if the delivery is fast, so early October offers are still under consideration," they added.

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Outlook

Vietnam's imported scrap market is expected to remain under pressure due to weak demand, sluggish finished steel sales, and continued price cuts from Japanese suppliers. Flooding and tight domestic scrap supply provided brief interest in imports, but with low electric-arc furnace operations and competitive pricing from US and Japanese scrap suppliers, buying activity is likely to stay limited. Local scrap prices in northern Vietnam may drop due to increased supply following the typhoon, potentially further softening the market in the near term.