Vietnam: Imported bulk scrap prices from Japan continue to slide, US offers rise by $4/t w-o-w

• Japanese H2 scrap offers for Vietnam have fallen to a two-year low.
  
  
• Improving weather conditions, reconstruction efforts to revitalise scrap demand.
  
  

In Vietnam imported ferrous scrap prices continued their downward slide, primarily driven by competitive offers from Japan, hitting a two-year low after a w-o-w drop of $1-2/t. Weak demand and stiff competition further pressured prices.

Trading activity for deep-sea bulk scrap remained subdued, as more attractive offers from Japan dominated the market.

According to market insiders, Vietnamese buyers maintained a cautious approach, only purchasing small tonnages when pricing was favourable. Indicative offers for US bulk scrap were heard at $355-360/t CFR for HMS 80:20, while Australian-origin cargo was priced more aggressively at $360/t CFR.

A Vietnam-based buyer commented: "Despite these offers, there was no buying interest, as Vietnamese mills kept their distance from the deep-sea bulk scrap market."

A source from Vietnam said, "Japanese scrap offers fell further, with H2 priced at $330-335/t and HS at $355/t. These offers undercut other seaborne and domestic materials, prompting some mills to bid HS and shindachi at $340-345/t CFR."

Scrap prices in Vietnam continued to decline last week, with buyers delaying bookings amid weak fundamentals in the finished products segment. Japanese bulk H2 scrap levels decreased by $6-10/t w-o-w, reaching $320-325/t CFR. On the other hand, mills were hesitant to purchase above $325/t CFR.

When analysing the declining price trend for Japan-origin scrap, Japanese suppliers are facing weak demand across other key markets especially South Korean buyers, in particular, have been pressing for discounts. This is because POSCO reduced its bids by JPY 5,500/t ($38/t) over the past month due to a bearish outlook on steel and raw materials.

A South Korean trading firm mentioned that the worsening conditions in the longs market, driven by sluggish construction, bankrupt distributors, and rising electricity costs, are all compounded by weak demand. In Taiwan, offers for Japanese H1/H2 scrap fell by $8-10/t to $315-320/t, as suppliers faced stiff competition from US containerised scrap, amid a similarly slow longs market.

Additionally, Vietnamese buyers had already accumulated sufficient semi-finished stocks in previous months. US-origin HMS (80:20) containerised scrap was offered at around $315-320/t CFR, down from $325/t CFR last week.

No bulk offers for the same grade and origin were reported last week, as interest remained absent.

Assessments

• Weekly assessment for deep-sea bulk US cargoes of HMS (80:20) CFR Vietnam stood at $355/t, up by $4/t w-o-w.
  
  
• Weekly assessment for Japanese-origin H2, a major tradable grade in Vietnam's scrap market, was down by $1/t to $335/t CFR.
  
  

Vietnam's domestic market: Vietnam's domestic scrap market remained sluggish due to unsupportive weather and slow long-product sales, with buying interest impacted. Scrap collection in the north decreased after a recent typhoon, but some producers shifted focus to domestic semis.

A domestic steel producer said: "Producing rebar from local BoF 3sp billet, priced at VND 12,100/kg ($492/t) DDP, is currently more profitable than using domestic scrap."

Outlook

Market experts suggest that the recent strong rebound in China's domestic steel market, along with low inventory levels at most mills, may lead to increased interest from Vietnamese buyers in the seaborne scrap market. Activity in Vietnam's scrap market is expected to rise in the coming months, as improving weather conditions are likely to boost domestic demand for finished steel, resulting in higher steel production. Furthermore, the widespread flooding and infrastructure damage in northern Vietnam during early September are expected to drive increased steel consumption for reconstruction efforts.