Vietnam: Imported ferrous scrap prices stable w-o-w ahead of Tet holidays

The Vietnamese imported ferrous scrap market showed stability ahead of the Tet holidays, with Japanese-origin import prices for scrap in Vietnam remaining largely unchanged. Despite a slight recovery in demand, the overall market sentiment was weak, according to a source from a Vietnamese mill.

H2 grade bids in Vietnam maintained their position at $400/t CFR, in line with a deal early in the week for a 5,000 t cargo at the same level. Correspondingly, H2 offers stayed stable at $405/t CFR, and H1/H2 50:50 grade was offered at $395-$401/t CFR for the week.

On the other hand, US-origin HMS (80:20) bulk scrap hovered at around $410-415/t with no major inquiries heard from market participants for the week.

Vietnamese traders report a slow market with muted demand for finished steel. Nevertheless, in anticipation of the Tet holidays, some buyers were actively participating, aiming to replenish their stocks.

Japanese trading sources observed strong scrap demand from Japanese mills, and FAS collection prices have held steady since the previous Monday.

The majority of market participants note that the scrap shortage has prompted mills to engage in active restocking, driven by a recovery in January. Despite signs of improvement, the market remained weaker on a y-o-y basis.

Domestic market: In Vietnam, the northern region saw heightened steel demand propelled by government projects, while the southern region grappled with low production for EAFs, prompting some mills to acquire billets for rerolling.

Despite the overall stability in the Vietnamese market, a second trader highlighted that the upward trend in scrap prices might render margins unviable for mills, leading to a cautious approach in not hastily aligning with the higher seaborne prices.

Driven by a local shortage, domestic scrap prices in Vietnam surged. In the northern region, where downstream demand was robust, "Type 1" or H2-equivalent 3-6mm scrap prices rose to Dong 9,900-10,500/kg ($402-$426/t), compared to the previous week's range of Dong 9,700-10,100/kg. Meanwhile, in the southern region, prices for the same grade remained steady at Dong 9,600-9,950/kg.

Exchange rate: The dollar opened this week steadily as investors assessed U.S. economic data ahead of the Federal Reserve policy meeting. Geopolitical tensions in the Middle East restrained risk sentiment. The dollar index, gauging the U.S. currency against six peers, edged 0.01% higher to 103.55 on Monday. It is on track for a 2% gain in January, reflecting tempered expectations of immediate and significant U.S. interest rate cuts.

Outlook: The import of scrap into Vietnam is expected to remain subdued during the upcoming Tet holidays, primarily due to the absence of buyers. Traders anticipate that domestic prices are likely to find support in the short term.