Vietnam: Imported ferrous scrap prices decline amid bid-offer disparity, cautious outlook

In Vietnam, the ferrous scrap market experienced a minor price decrease, accompanied by a notable disparity between bids and offers. Importers in Vietnam were seen bidding for US-origin HMS (80:20) at $375/t CFR, marking a $5/t decline w-o-w. Despite the negative sentiment, some market participants were willing to sell.

According to a Vietnamese trader, local mills are opting for shredded scrap as a cost-saving measure to replace heavy scrap. Despite this shift, there hasn't been a significant decline in production efficiency, although it varies depending on the mill's technology.

Offers & indicatives:

Japan-origin H2 indicative offers during mid-week were heard at $393-395/t CFR Vietnam, bulk, as per a trading source.

BigMint's assessment for Japan-origin H2 scrap dropped by $2/t w-o-w to $398/t on a CFR Vietnam basis, during the first half of last week, H2 bids stood at $390/t CFR Vietnam for Japan-origin bulk shipments.

Offers for US-origin HMS (80:20) remained largely stable at the start of last week at $400/mt CFR Vietnam, bulk, as reported by a Vietnam-based mill source. Similarly, Australian-origin HMS (80:20) is being offered at $395/t CFR Vietnam, bulk, as per a Vietnam-based mill.

BigMint's US-origin HMS (80:20) bulk scrap assessment stood at $404/t, down by $4/t w-o-w. According to industry sources, workable levels for US-origin HMS (80:20) bulk scrap range between $395-398/t CFR Vietnam.

Similarly, US-origin HMS (80:20) heard a deal on the weekend at a comparatively lower price, indicating negative sentiments from the supplier side, according to a trading source.

Domestic market: Formosa Ha Tinh, a major Vietnamese steelmaker, has reduced its domestic prices for HRC to boost local demand. New prices for April-May shipments range from $598/t-$611/t CIF, depending on the volume. This follows previous price cuts in February due to weak domestic, export demand and a drop in imported HRC prices

Initially, Formosa slashed prices by $39-50/t in January but had to revise them again due to slow trading activity in both the domestic and export markets. However, experts are sceptical about whether this move will stimulate sales in the short term.

Hoa Phat has reduced monthly HRC (SAE1006, non-skinpass) prices for May-June, 2024 sales by $10-15/t m-o-m. Post revision, effective prices are at VND 14,690-14,720/kg or $596-597/t CIF HCMC (southern region) against previous price of VND 14,852/kg ($610/t) excluding VAT.

Outlook: In the near term, Japanese H2 scrap prices are expected to face downward pressure due to sluggish steel market conditions in Vietnam. Additionally, the availability of competitively priced US HMS (80:20) bulk scrap further contributes to weakening supplier-side sentiments.