Vietnam: Imported bulk scrap prices drop by over $5/t w-o-w; domestic scrap maintains stability

Imported ferrous scrap prices witnessed a downtrend w-o-w, as a drop was seen in US-origin HMS (80:20) bulk scrap prices along with, Japanese H2 offers that decreased by $5/t w-o-w. The subdued sales of finished steel contributed to the overall dampening of sentiments in the imported scrap market.

• BigMint's weekly assessment for Japanese H2 scrap was reportedly in the range of $374-375/t CFR Vietnam, down by $5/t w-o-w from last week's $380/t, whereas buyers were aiming for $365-366/t CFR Vietnam.
  
  
• BigMint's weekly assessment for US bulk HMS (80:20) stood at a range of $384-385/t CFR Vietnam, which declined by $6/t w-o-w, and offers for Australian HMS were around $378-380/t CFR.
  
  

South Vietnam's domestic scrap market remained stable, with prices for type 1 or H2-equivalent 3-6 mm scrap unchanged at VND 8,300-8,900/kg( $332-$356/t).

As per market insiders, this stability is attributed to consistent dynamics, with mills continuing to favour domestic scrap due to quicker delivery times despite limited supply.

As per a mill side source, "Domestic Vietnam scrap market is largely unchanged and the market is weak due to price of rebar and wire rods keeping under production cost."

Earlier last week, a H2 deal was reported at $370/t CFR Vietnam, with offers heard at $375/t CFR Vietnam and above, and a bid at $370/t CFR Vietnam.

Vietnamese steel major, Formosa Ha Tinh, has reduced HRC prices by $10/t m-o-m for June-July, 2024 shipments. However, the company has maintained its Vietnamese dollar (VND)-denominated list prices for the same. Subsequent to the revision, prices of HRC (SAE1006, skin pass) stood at around $585-595/t CIF Ho Chi Minh City (HCMC). Meanwhile, non-skin pass coils were at around $580-590/t CIF, sources informed BigMint.

Formosa has strategically decided to lower prices in response to competitive pricing adjustments from both domestic and international competitors. Its domestic rival, Hoa Phat, recently reduced its monthly HRC (SAE1006, non-skinpassed) prices by $40-45/t for June-July, 2024 sales. Following the revision, effective prices now stood at $553/t or VND 13,740,000/t, excluding VAT. Additionally, China's Baosteel has implemented a $14/t reduction in HRC prices for sales in May 2024 amid subdued global sentiments.

Moreover, reduced exports, sluggish domestic construction activity, and a recent decline in imported HRC offers have prompted Formosa to adjust its pricing strategy to remain competitive and preserve market share.

In March, the Vietnamese automobile market saw a significant rebound in total sales, with a 135% increase compared to February, according to the Vietnam Automobile Manufacturers' Association (VAMA). However, sales were still 9% lower than March 2023. In Q1 2024, VAMA members' total sales declined by 17% y-o-y, with passenger cars down by 21%, commercial vehicles by 6%, and special-purpose vehicles by 48%. Domestic assembly sales totalled 30,919 units (down 20%), while imported cars were 27,246 (down 14%). Despite VAMA's data, VinFast and other automakers did not disclose their business results. Hyundai led March sales with 4,542 vehicles, followed by Toyota, Ford, Mitsubishi, and Honda. With an ample supply and new model launches, the market anticipates a prosperous recovery for the remainder of 2024.

Outlook: Looking ahead, there are anticipations of increased demand and possible price upticks for domestic Vietnamese scrap in the near future. According to sources, "There appears to be a slight improvement in housing demand in Southern Vietnam, coupled with decreasing inventory levels of rebars in the market."