Vietnam: Imported ferrous scrap market stable amid weak domestic steel sentiments

In Vietnam, imported offers remained scarce as Japanese suppliers prepared for an extended holiday. Mills were reportedly bidding at $370-$380/tonne (t) CFR Vietnam for Japanese H2 grade scrap, a rise from the previous week's $360-$365/t CFR Vietnam in August. However, no actual deals were reported. As a result, Vietnam's imported ferrous scrap market remained stable amid weaker sentiments in the domestic steel segment.

There is a prevailing belief among market participants that restocking demand will be limited due to the persistently low domestic steel prices. This drop in prices is attributed to the significant decrease in Chinese steel prices from the previous week. While there have been indications of bulk cargo bookings to Vietnam at $385-$390/t, these figures are yet to be confirmed.

Domestic market overview

Within the Vietnamese domestic market, scrap prices experienced a slight decline. Despite this, higher bids for seaborne material were observed. This was because of a shortage in available seaborne offers. Many domestic steel producers find themselves in a challenging situation as they had procured raw materials at higher costs earlier in the year, leading to selling products at prices below their production costs. This predicament is seen as a common trend within the steel industry this year.

A representative from a Vietnamese mill informed that their plant's operations were severely affected, operating at only 30%-40% capacity. They attributed this situation to the continuous decline in prices for finished products, which has been noticed since the start of the year.

The domestic steel market in Vietnam has not exhibited signs of improvement during this period. Domestic rebar prices, for instance, saw a decrease of VND 100/kg ($4.21/t) due to weakened demand for construction steel, compounded by ongoing challenges within the real estate sector.

In contrast, markets in Thailand remained relatively stable, displaying prices within the same range as before, according to sources.

Hoa Phat's steel sales increase 3% in July: Hoa Phat, a prominent steel manufacturer, reported a 3% m-o-m increase in steel sales for July. Sales of steel billets, construction steel, and hot rolled coils (HRCs) totalled 555,000 t. Concurrently, crude steel production saw a substantial 22% m-o-m increase, reaching 633,000 t. However, during January to July, 2023, cumulative crude steel output declined by 30% y-o-y to 3.5 mnt. Similarly, the cumulative sales volumes of construction steel, steel billets, and HRCs stood at 3.46 million tonnes, reflecting a 23% y-o-y decrease.

Outlook: Looking ahead, the situation in the Vietnamese steel market remains complex and challenging, with uncertainties surrounding both domestic and overseas supply and construction activities.