Vietnam: Imported ferrous scrap prices remain stable amid post-holiday subdued steel demand

The Vietnamese imported ferrous scrap market remained subdued after the Lunar New Year holidays, with minimal activity reported. Japanese offers also encountered sluggish demand, influenced by the fluctuating JPY against the USD.

According to sources, US-origin HMS (80:20) bulk scrap prices were stable, ranging between $410-415/t, while H2 scrap indicatives hovered around $400-405/t CFR Vietnam.

Towards the end of the week, no offers or bids were observed for H2 scrap in imported bulk cargoes, as confirmed by a Japanese trader.

Market transactions were minimal due to the Lunar New Year holidays in Vietnam and Taiwan. Additionally, limited scrap purchases by South Korea are not expected to have significantly impacted prices.

Currency exchange: Globally, the dollar exhibited stability on Monday amidst recent data indicating sustained US inflation, raising uncertainties regarding the Federal Reserve's future monetary policy. Meanwhile, the JPY remained near the significant 150 per USD level, prompting attention from officials amid concerns over currency movements and potential intervention by the authorities.

The current exchange rate stability could shift if the Fed maintains high rates, potentially leading to volatility in the domestic market. The US dollar is strengthening globally, driven by positive signals from the US economy and geopolitical tensions. In Vietnam, the State Bank of Vietnam (SBV) has set the central rate at VND 23,971 per USD, but unofficial market rates have surpassed VND 25,000.

Experts anticipate increasing pressure on the VND/USD exchange rate in the first quarter, influenced by factors such as US economic indicators and geopolitical instability. Despite global challenges, Vietnam's foreign exchange reserves remain ample at around $95-96 billion, allowing the SBV to respond effectively to market dynamics.

Pomina Steel Corporation (POM) has announced plans for an extraordinary general meeting (EGM) to propose a restructuring plan. The company aims to restart its blast furnace in the fourth quarter of 2024, following a period of inactivity, in preparation for the anticipated recovery of real estate projects later in the year.

The EGM, scheduled for 1 March, 2024, will also include a proposal to increase investments for the blast furnace project at Pomina 3 branch to VND 5.9 trillion ($245.8 million) from nearly VND 5 trillion, representing an increase of over VND 900 billion.

Outlook: Import activity in Vietnam is expected to maintain a modest level following the holiday season, supported by steady collections from the US. However, bulk prices from Japan may experience fluctuations due to the near-term weakness of the Japanese yen.