Vietnam: Imported ferrous scrap offers drop by up to $10/t w-o-w on weak demand from steelmakers

Vietnam imported ferrous scrap prices remained downward as US-origin offers and indicative prices dipped to $395/t CFR Vietnam, with some traders suggesting $385/t CFR as a more reasonable trading level. However, demand for deep-sea bulk cargoes in South Korea and Vietnam remained subdued. South Korean buyers stayed out of the seaborne market as domestic scrap prices continued to decline.

BigMint's US-origin HMS (80:20) bulk scrap assessment stood at $395/t, down by $9/t w-o-w. According to industry sources, workable levels for US-origin HMS (80:20) bulk scrap range between $390-392/t CFR Vietnam.

As per market participants, Vietnamese importers showed reluctance to bid above $375/t CFR for US-origin HMS (80:20), marking a $10/t decrease compared to the previous week. Despite the subdued sentiment, sellers were cautious about making deals, as reported by a US-based exporter.

Japan-origin H2 indicative offers last weekend were heard at $388-390/t CFR Vietnam, bulk, as per a trading source.

BigMint's assessment for Japan-origin H2 scrap dropped by $10/t w-o-w to $398/t on a CFR Vietnam basis, H2 bids stood at $380-385/t CFR Vietnam for Japan-origin bulk shipments.

Vietnamese mills are favouring local scrap over seaborne options due to high prices. Downstream, the price of domestic billet in Vietnam has sharply decreased by VND 600/kg ($24/t) this week. Meanwhile, the price of local induction furnace billet has fallen to $490/t but still faces difficulty in sales.

Domestic market: Vietnam's domestic scrap prices dipped due to subdued market activity and weak demand, particularly as large volumes were booked before the Lunar New Year. In northern Vietnam, prices for Type 1 or H2-equivalent 3-6 mm scrap decreased by VND 300-400/kg ($12-$16/t) to VND 9,350-9,500/kg ($382-$388/t) by 8 March, while in the southern region, prices for the same grade dropped by VND 150/kg to VND 8,900-9,250/kg. Market participants attributed this decline to the arrival of booked cargoes and a generally quiet scrap market.

In the global market, Japanese scrap prices saw a slight decline following Tokyo Steel's price cut on 8 March. Seaborne interest for Japanese scrap is limited, with Vietnam and South Korea holding off bids due to lower domestic prices.

Vietnamese import prices for HRC dropped due to weak local demand and a gloomy economic outlook in China, affecting market sentiment. SAE1006 coil offers from a top-tier Chinese mill fell by $15/t to $580/t CFR since 1 March. Prices for Q195 coils from second-tier Chinese mills were at $538-540/t CFR compared to $545/t CFR previously, while Q235 coil prices were $545-548/t CFR versus $555/t CFR at the end of February. Vietnamese customers holding back from signing contracts amid expectations of further price declines.

The State Bank of Vietnam (SBV) kept its reference rate steady at VND23,972. Since the beginning of the year, the US dollar has strengthened against the dong by 1.6%. In February, the Hanoi Stock Exchange (HNX) conducted 12 auctions of government bonds totalling nearly VND28.2 trillion ($1.1 billion). Interest rates saw an upward trend, with rates reaching 1.42% for 5-year bonds, 2.31% for 10-year bonds, 2.51% for 15-year bonds, and 2.65% for 20-year bonds.

Outlook: In the near term, US bulk scrap prices may face pressure due to the bearish trend in the global scrap market, particularly in Turkiye. Meanwhile, Japanese H2 bulk scrap prices are expected to decline in the upcoming Kanto export tender.