Vietnam: Higher preference for domestic material drags down imported HRC offers

Imported HRC offers to Vietnam from China dropped further by $5/t. Limited options among imported HRC and competitive prices of products produced domestically are keeping buyers away from bookings.

Current imported HRC offers:

• China (SAE1006): $600/t CFR (from tier I or II mills), down by $5/t w-o-w.
  
  
• China (SS400): $570-580/t CFR depending upon mills, unchanged over the week.
  
  
• India (SAE1006): Indications are afloat at around $625-630/t for the last couple of weeks. However, an Indian steel major booked around 60,000 t HRC (boron added) for export to Vietnam at $590/t CFR for end-October and early-November shipment. The deal was concluded 10-13 days back. However, the deal could not be confirmed at the time of publishing this article.
  
  
• There were no offers heard from other countries like Japan, South Korea and Taiwan.
  
  

Reasons for drop in offers:

1. Domestic HRC garners interest amid competitve pricing: The Vietnamese govenment is focusing on self sufficiency since the country lifted the stringent COVID-19 lockdowns. Hoa Phat, Vietnam's integrated steel producer, is witnessing better sales over the past few months. This, along with the recent increase in global HRC offers, nudged Hoa Phat to announce an increase in HRC prices this month to VND 14,200,000/t (599/t) for November and early December sales. The price is up by VND 200,000/t from the previous month's announcement. For October and early November sales, the price was $595/t (VND 200,000).

However, Formosa has maintainedHRC (SAE1006, skinpassed) prices at $610/t. Prices are on CIF Ho Chi Minh City (HCMC) basis.

Furthermore, Vietnam's manufacturing Industrial Index of Production (IIP) is also rising continuously over the past couple of months. The IIP for July was at 192.7, up marginally by 1.1 % m-o-m, which rose by 3.3% in August to 199.1.

2. Indian mills turn vigilant; await counter bids: Indian steel majors have moved to the sidelines after floating an offer of $630/t CFR Vietnam a couple of weeks back. Now most of them are on a lookout for counter bids. Also, curtailment of output amid maintenance shutdowns have contributed to easing the inventory levels. Thus, mills are not having much of an appetite for exports.

Most of the producers already increased their prices by about INR 500/t ($6) a week back. "Better realisations are being fetched at the domestic level, and restocking activities are picking up pace. Thus, we are waiting for the overseas market sentiments and prices to improve," said a mill-based source.

Mills might come up with revised offers by mid-October as most of them are focused on the surge in domestic demand ahead of the Dussehra and Diwali festivals, informed trader sources.

3. South Korean HRC offers withdrawn: South Korean mills are not offering HRC for exports. The impact of typhoon Hinnamnore and subsequent fire incidents have led to a temporary withdrawal from the overseas markets. Although blast furnace operations and semi-finished steel production have resumed, hot strip mills and other downstream facilities might take time to resume operations. Hence, they are active in offering slabs but have no allocation for HRC exports.