Vietnam: Imported ferrous scrap prices move upward w-o-w; amid firm offers

Imported scrap prices in Vietnam witnessed a recent uptick following positive trends in the global market. Offers for Japanese H2 scrap rose by $5/t to $395/t CFR Vietnam, up from the previous week's workable level of $380/t CFR. Higher-quality grades from Japan were available at $420-425/t CFR, marking a $5-10/t increase w-o-w.

No definite offers were recorded for the US-origin bulk HMS (80:20) as suppliers directed their attention to the robust Turkish market. Following the recently concluded Kanto tender, it is evident that Japanese materials will persist at elevated prices. This circumstance could prompt Vietnamese buyers to consider alternative suppliers in case a viable gap between finished steel and scrap is not maintained as they navigate market dynamics in pursuit of competitive options to maintain production margin.

Offers and Indicatives:

• Bulk HMS offers from the US ranged between $410-420/t CFR Vietnam, with bids at $390/t CFR; market estimates maximum workable prices for buyers at $395-400/t CFR.
  
  
• Japanese H2 offers increased by around $395-400/t CFR, Vietnam with the better realisation of JPY; the workable price is still $380/t.
  
  

Domestic market: A major local mill in Vietnam announced purchasing prices for H1 grade at VND 9,600-9,700/kg ($395-399/t) DDP, a rise of VND 200/kg ($8/t) due to higher imports. Domestic scrap prices in North Vietnam surged, reaching VND 9,350-9,700/kg ($384-$398/t) for H2-equivalent domestic Type 1 scrap. Southern Vietnam also saw an increase, with prices rising to VND 8,500-9,200/t recently.

In response to elevated raw material prices, wire rod offers increased by VND 200/kg ($8/t), while rebar prices remained flat after a VND 150/kg ($6/t) rise the previous week. Contract levels for domestic 3SP billet saw a slight increase of VND 50/kg ($2/t) w-o-w, according to a local trading company representative.

Hoa Phat Steel: Hoa Phat Steel raised its monthly asking prices for flat steel by VND 660/kg ($33/kg) for domestic sales. The company reported a 12% m-o-m increase in steel product sales to 709,000 t in November 2023, while crude steel production dipped by 2% to 623,000 t. The cumulative steel production for 11 months is 6 million tons, down 14% y-o-y.

VN Index: Vietnam's benchmark VN-Index showed a marginal increase, closing at 1,125.50 points on Monday, with the U.S. dollar weakening against the Vietnamese dong. The State Bank of Vietnam reduced its reference rate by 0.08% to VND 23,932. The greenback increased by 0.16% to VND 24,740 on the black market, representing a 2.70% rise against the dong since the beginning of the year.

Outlook: Observers in the market acknowledge the upward trend in scrap prices but note a cautious sentiment, with many viewing the current situation as temporary. Industry insiders are anticipating heightened scrap buying in the upcoming weeks as mills aim to re-stock in preparation for January shipments ahead of the Lunar New Year holidays.