Vietnam: Imported bulk ferrous scrap index witnesses mixed trends; slow restocking amid weak downstream sales

Vietnam's imported bulk ferrous scrap index showed mixed trends for the last week as Japanese H2 scrap offers increased slightly due to a stronger JPY. However, sluggish downstream sales have tempered restocking demand. In contrast, HMS (80:20) bulk scrap offers softened as sellers diverted their focus to buyers in Turkiye and other Middle Eastern regions.

In the quieter deepsea market, Vietnamese mills are focusing more on Hong Kong-origin scrap. As of today, Australian HMS (80:20) bulk scrap was considered tradable due to weak demand and high freight rates to South Asia, prompting a shift in supply towards Vietnam and East Asia.

US-origin bulk scrap is unlikely to reach Vietnam or South Korea, as sellers are prioritising Turkiye and the Middle East. High freight rates to Bangladesh and rising Japanese scrap prices are pushing Vietnamese buyers to seek alternative sources.

Australian bulk offers were slightly lower at $386-388/t but Vietnamese market participants would only pay up to $380/t looking at the softening US origin bulk scrap export price.

Japanese H2 bulk scrap workable levels remained steady at $366-372/t CFR Vietnam, but there were no offers for H1/H2 50:50 grades due to a poor exchange rate for the Japanese yen (JPY). Consequently, mills are turning to shortsea transactions, with a deal for Hong Kong-origin A/B 50:50 grade scrap concluded at $350/t CFR Vietnam. The Japanese currency strengthened from JPY 142 to $1 as of today, its highest for more than eight months, according to currency converter xe.com.

This has pushed offer prices for H2-grade material up to around $370-375/t CFR Vietnam for most of the week, although a steelmaker had heard offers at $366-368/t CFR softening last weekend after Tokyo Steel's reduction of the domestic scrap purchase price in Japan.

On the other hand, bids also moved upward to $364-365/t CFR Vietnam lastly, widening from just $360-362/t from the previous week. Market sources said that they were not seeing much restocking activity due to sluggish downstream markets and the availability of cheaper Chinese billets.

Assessments:

Weekly assessment for deep-sea bulk US cargoes of HMS (80:20) CFR Vietnam stood at $382/t, down by $3/t w-o-w.

Weekly assessment for Japanese-origin H2, a major tradable grade in Vietnam's scrap market, up by $1/t to $371/t CFR.

Last week, Hoa Phat reduced its monthly HRC (SAE1006, non-skinpassed) prices by around $25/t for September, 2024 and October, 2024 sales, sources informed BigMint. Post-revision, effective prices stand at approximately $530/t or VND 13,300,000/t for the southern region, excluding VAT. The company has lowered its prices to remain competitive in the face of declining domestic demand and falling import prices from China.

Vietnam's Pomina Steel Corp. is negotiating to sell its Pomina Steel 2 facility to Japan's Nansei Steel for $20.8 million. If completed, Nansei will own a 51% stake in Pomina 2, which includes a 500,000 tonnes (t)/year electric arc furnace and a 500,000 t/year rolling mill. Pomina Steel Corp. will retain Pomina 1 and Pomina 3. This follows the suspension of Nansei's previous plan to acquire a 20.04% stake in Pomina Steel. The sale is set to finalise by July 2026, with Nansei managing contract production and paying an annual processing fee for the next two years. The deal is not expected to significantly affect scrap prices, as Pomina has not sourced Japanese scrap this year.

Outlook

Vietnam's deep-sea scrap bulk scrap offers from Japan might continue to rise due to the extraordinary recovery of the JPY against the US dollar. On the other hand, as per market participants buyers are continuing their wait-and-watch approach to get suitable workable levels in the market.