Vietnam: Imported ferrous scrap buyers cautious amid uncertainties, weak domestic steel market

The Vietnamese imported scrap market continues to witness low buying interest this week too, as mills stayed away from buying imported material due to uncertain market conditions. The country's finished steel market also shows no signs of recovery.

Mills are giving priority to domestic scrap and short-sea bulk shipments from Japan and Hong Kong. Interestingly, imported billets have once again become more cost-effective than imported scrap.

The domestic scrap collection and its flow to mills are currently not smooth, potentially leading to a bullish price sentiment. However, the strengthening Japanese Yen (JPY) has made it difficult for buyers in Vietnam, Bangladesh, and Taiwan to afford higher prices for Japanese scrap.

Meanwhile, declining imported scrap prices in Turkiye have also introduced fresh concerns into the seaborne scrap market, prompting buyers to stay cautious about scrap procurement. In addition, buyers remain passive due to the ongoing weakness in the domestic steel market.

Scrap offers

Vietnamese mills are focused on procuring scrap from the domestic market on competitive prices. Purchasing prices for domestic H2 scrap from the northern mills remained stable at around VND 8,900 per kilogram DDP ($376/t). However, concerns are arising that local prices might rise soon due to lower scrap collection. It is anticipated that the market will hopefully improve by the fourth quarter.

• Japanese H2 scrap is being offered at approximately $395/t CFR Vietnam, compared to $385/t in the previous week. SteelMint's assessment for Japanese H2 scrap offers moved up slightly to $390-395/t CFR Vietnam this week.
  
  
• Meanwhile, offers for US-origin HMS (80:20) scrap are at $395-400/t CFR.
  
  

Other Southeast Asian markets overview-

• Taiwan: The Taiwanese imported scrap market continued to remain weak due to dull demand amid a slow finished steel sector. Players expect the downtrend to continue. Slow long product sales and competitive billets offers are affecting the buying appetite in the country. The containerised ferrous scrap market ended the week on a steady note, but some buyers hinted at possibly lower prices this week due to tepid steel sales and bearish market sentiment.
  
  
• Thailand: Thailand has extended antidumping (AD) duties on flat products from China and Malaysia, following the review initiated last year. Meanwhile, a trade of 2,000 t of Australia-origin shredded scrap was concluded at $395/t CFR Thailand. Deals remained absent for HMS grade material.
  
  

Vietnam's domestic market-

• Hoa Phat Group restarted its idled Dung Quat plant blast furnace, making all four blast furnaces (BFs) fully operational in the region. The steelmaker had previously shut down its BFs at Dung Quat plant and Dai Duong plant last year due to weak demand.
  
  
• Vietnam's benchmark VN-Index rose 0.40% to 1173.13 points today, reaching the year's new peak. The index closed 4.73 points higher after gaining 2.98 points on 14 July 2023. Trading on the Ho Chi Minh Stock Exchange (HoSE) fell by 10.85% to VND 18.61 trillion ($787.21 million).
  
  

Outlook

In the short term, the Vietnamese imported scrap market may continue to witness subdued buying interest. The ongoing weakness in the domestic steel market and the uncertain Turkish scrap market will contribute to the cautious approach of buyers.