Vietnam: Hoa Phat raises HRC prices by VND 200/t ($8/t) for November sales, exporters watchful

Vietnamese buyers' interest has shifted towards domestically produced hot-rolled coils (HRC) as steel majors have announced their prices for November and early-December sales. Today, Vietnam's major integrated steel producer, Hoa Phat has increased its prices for HRC (SAE1006, non-skinpasses) to VND 14,200,000/t (approximately $599/t) CIF Ho Chi Minh City (HCMC). Prices are up by VND 200,000/t over the previous announcement.

However, last week, Formosa Ha Tinh (FHS) had announuced a roll-over in its HRC (SAE1006, skinpasses) prices at VND 14,470,000/t ($610/t) CIF HCMC for November and early-December sales.

This has kept the major exporting countries watchful. A few exporting countries are waiting for the counter bids to improve, while a few others are on the lookout for higher realisation fetching markets, said reliable EXIM trade sources.

Imported HRC offers to Vietnam

• • China (SAE1006): $605/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): Last heard indications were around $630/t CFR towards last weekend.
    
    
  • Taiwan (SAE1006): $610/t CFR was being offered a week ago.
    
    
  • There were no offers from Japan and South Korea.
    
    
  
  
  

Factors backing the price announcement by mills-

High preference for domestic HRC: Buyers continue to show higher preference for domestically produced HRCs over imported ones mostly because of the delivery lead times and competitive prices. "Vietnamese steel majors have been enjoying a better market share since the beginning of the year. Also, demand is likely to pick up further in the near term," said a reliable Vietnamese source. The offset of monsoons is likely to boost demand for construction steel and flat steel products which is evident from the increase in August month sales statistics of Hoa Phat.

Exporting countries keep domestic prices firm: Major HRC producing countries like China, Japan and India have either kept their domestic market prices firm or increased the same. For instance, China's Baosteel and Japan's Tokyo Steel have kept their prices unchanged for October sales. Whereas a few mills in India have announced a INR 500/t increase in their HRC list prices for end-September sales. This is also a plausible factor influencing the recent price announcement of Vietnamese mills.

Reduced competition with exporting countries: The competition with respect to imported HRCs has been low since the beginning of the year. Vietnamese steel majors had been reducing their offer prices since June 2022 to maintain the competitiveness and to incite buying interest. In the current scenario, imported HRC offers are almost in line or above those of the domestic mills.

On the other hand, the turmoil in the global HRC market amid South Korea, Japan and China struck by typhoons recently shall weigh on the allocations from these countries in the near term. Meanwhile, South Korea is facing issues in feeding material to its upstream mills as the typhoon Hinnamnore has led to a temporary shutdown of hot-strip mill. Thus, they are relying on Chinese and Japanese imports.

Furthermore, Indian mills have also started focussing in the domestic market on better realisations while there is a limited acceptance for boron added (alloyed) HRCs in the overseas markets. Since the levy of 15% export duty on non-alloyed flat steel products in late May 2022, mills were forced to offer alloyed HRCs to avoid any duties.

Thus, mills are anticipating supplies of imported HRCs to remain low for some time.