Vietnam: Imported bulk scrap offers inch up by $2/t w-o-w in cautios market

• Higher freights, tight vessel supply hit Japanese prices
  
  
• Project delays, low production sustain bid-offer gaps
  
  

Vietnam's imported ferrous scrap offers edged up slightly despite sluggish demand as buyers maintained a cautious stance amid a persistent bid-offer gap and a slowdown in domestic demand. The weak domestic market sentiment stemmed from low government investment disbursements and delays in project approvals, further dampening buying activity.

Overall, offers edged up by a mere $2/tonne (t).

High freight costs and tight vessel availability kept Japanese H2 scrap export offers elevated, limiting interest from Vietnamese mills. Meanwhile, US-origin deep-sea cargo offers stood firm at $365/t CFR Vietnam, while buyers targeted $345-355/t CFR, creating a significant bid-offer mismatch. This disparity prompted sellers to also adopt a wait-and-watch approach, leaving the market at a standstill.

CFR assessments

• Weekly assessment for deep-sea bulk US cargoes of HMS (80:20) stood at $365/tonne (t), up by $2/t w-o-w.
  
  
• Weekly assessment for Japanese-origin H2, a major tradable grade in Vietnam's scrap market, was at $338/t, up by $2/t w-o-w.
  
  

Market scenario

Market participants highlighted ongoing challenges in Vietnam's scrap market, citing deep-sea cargoes as "too expensive and risky to import due to the large volumes required". Low demand persists as mills are operating at only 60-70% capacity, favouring competitively priced alternatives.

A steel mill official noted, "Demand is still quite low. Normally, it should improve after the rainy season, but there is no big change. Last week's Kanto tender notched up the highest bid, but still it was not reflective of the true market scenario."

High freight rates and limited vessel availability further weighed on deep-sea offers, with fewer deals concluded. Another participant remarked, "Vietnam cannot afford to sell below cost. So mills are maintaining low production levels to avoid losses."

Domestically, scrap prices remained steady for the sixth consecutive week, with northern prices at VND 9,000-9,400/t ($354-370/t) and southern ones at VND 8,500/t ($335/t). Demand remains weak, aggravated by delayed government project approvals. A steady flow of competitively priced imported scrap is thus fulfilling 70-80% of the country's requirements, which is continuing to pressure the market.

Outlook

Vietnam's imported scrap market is likely to remain sluggish in the near term as weak domestic demand, driven by slow government project approvals and low investment disbursements, continues to weigh on buying sentiment. High freight costs and limited vessel availability will likely keep Japanese and US-origin scrap offers elevated, and help to maintain the bid-offer gaps. Additionally, with EAF mills operating at partial capacity and competitively priced alternatives available, import activity is expected to stay muted unless there are notable improvements in domestic or global market conditions.