Vietnam: Imported ferrous scrap prices continue to drop on weak demand

In Vietnam, prices for imported ferrous scrap particularly from Japan have decreased by $5/t w-o-w. This drop follows the monthly Kanto tender which saw prices falling to their lowest level in over two years.

The imported ferrous scrap market remained subdued this week. Australia-origin deepsea offers were heard at $360/t CFR Vietnam, while US offers for bulk HMS(80:20) fell to $355-360/t CFR Vietnam with dull buying interests at all, down from $365-370/t in recent weeks.

Vietnamese market participants said that the maximum workable price for Japanese H2 scrap from buyers has narrowed to $330-335/t CFR Vietnam, compared to $340-345/t previously.

In response to the downtrend and despite a recent rise in steel billet prices some Vietnamese buyers are cautious, linking the increase to seasonal demand before the Mid-Autumn holidays.

A Vietnam-based market source commented, "Vietnamese buyers stopped buying because of the possible anti-dumping retroactive duty, which could be 20% so October shipment is risky". "H2 grade offers to Vietnam lowered on the week to $346-350/t CFR, with bids at $330-335/t only," he added.

Assessments

• Weekly assessment for deep-sea bulk US cargoes of HMS (80:20) CFR Vietnam stood at $360/t, down by $4/t w-o-w.
  
  
• Weekly assessment for Japanese-origin H2, a major tradable grade in Vietnam's scrap market, was down by $5/t to $348/t CFR.
  
  

Vietnam's domestic scrap:

In northern Vietnam, Type 1 or H2-equivalent 3-6 mm scrap stayed at VND 9,000-9,500 per kg ($375-380 per tonne). In the southern region, prices for the same grade were range bound at VND 8,000-9,500 per kg, according to market participants.

Domestic demand for ferrous scrap in Vietnam has softened, leading to stable but cautious prices. Concerns about potential anti-dumping duties and higher domestic prices compared to imports are dampening buying interest.

As per market insiders, "As demand in Vietnam is just moderate, the steelmaker chose to keep its hot-rolled coil (HRC) prices for local customers nearly unchanged to stay competitive in a sluggish domestic market".

Vietnam's largest steel producer, Formosa Ha Tinh, has kept its hot-rolled coil (HRC) prices steady for October-November shipments, with non-skinpass SAE1006 and SS400 at $510-525/t CIF, and skinpass SAE1006 at $515-530/t CIF. This stability contrasts with a drop in Chinese HRC prices to $460/t CFR for Q195 and Q235, and $480/t CFR for SAE1006 due to lower futures prices and anti-dumping duty uncertainties. Despite this, Formosa's prices remain unchanged as market sentiment improves partly due to anticipated increased steel demand for rebuilding after recent floods in northern Vietnam.

Outlook

Market participants anticipate a near-term recovery in scrap demand. Additionally, the recent typhoon that caused extensive flooding and damage in northern Vietnam is expected to drive steel demand for rebuilding of infrastructure in the damaged regions.