Vietnam: Imported bulk scrap index witnesses mixed trends; mills cautious amid weak steel demand

Vietnam's imported ferrous scrap index witnessed mixed trends as offers from Japan have risen by up to $2/t w-o-w, driven by a stronger JPY. In contrast, US-origin HMS (80:20) bulk scrap offers have softened due to weak demand from the US domestic market, which is impacted by slower construction activity during the summer break.

Japan-origin H2 scrap offers increased by $4-5/t, reaching $370-372/t CFR Vietnam, though offers near $383-385/t were deemed unfeasible. Mills have withheld bids due to the sharp price increase and weak downstream demand.

HS scrap offers decreased from $400-405/t CFR Vietnam to $395/t CFR Vietnam, with bids heard at $380-385/t CFR Vietnam. Procurement activity remained subdued amid a persistent offer-bid gap and ongoing monitoring of the dollar-JPY exchange rate.

The US deepsea bulk market was quiet, with no viable offers and sellers finding bid levels too low. While there were inquiries for US-origin 80:20 deepsea bulk, potential buyers are considering $370-375/t CFR Vietnam, but securing cargo at this price seemed unlikely.

In recent trade, 500 t of containerised US-origin HMS(80:20) was bought by a Vietnam-origin mill at $345/t CFR Cai Mep.

Assessments:

Weekly assessment for deep-sea bulk US cargoes of HMS (80:20) CFR Vietnam stood at $385/t, a decrease of $1/t w-o-w.

Weekly assessment for Japanese-origin H2, a major tradable grade in Vietnam's scrap market, rose by $2/t to $370/t CFR.

Domestic market: In Vietnam, monsoon rains have reduced demand for obsolete scrap due to slowed construction activity. However, demand for high-grade scrap like HS and shredded continued to be strong, supported by blast furnaces.

Vietnamese steelmaker Formosa Ha Tinh Steel has obtained updated BIS certification for HRC, enhancing its competitiveness in India by avoiding import tariffs. Vietnamese HRC is priced at $560/t CFR India, compared to $545/t CFR for Chinese cargoes, which face a 7.5% tariff. A recent Japanese cargo arrival in India has pressured domestic HRC prices, causing exw Mumbai prices to drop by INR 1,500-2,000/t in early July.

Vietnam reported a $14.08 billion trade surplus for the first seven months of 2024. Trade turnover reached nearly $440 billion, with exports up 15.7% to $226.98 billion and imports up 18.5% to $212.9 billion. July's trade value was $69.72 billion, a 21.8% y-o-y increase. The U.S. is Vietnam's largest importer ($66.1 billion), and China is the top exporter to Vietnam ($79.2 billion). Le Quoc Phuong expects Vietnam to meet its 2024 export target of $377 billion, stressing quality and market diversification. The Ministry of Industry and Trade is boosting support for businesses and advancing trade agreements.

Outlook

Vietnam's deep-sea scrap import market is expected to remain subdued despite a rise in H2 scrap offers from Japan. Moreover, the near-term market trend is depending upon recovery in domestic finished steel post-monsoon.