Vietnam's imported ferrous scrap prices hold steady amidst weak demand and bid-offer disparity

In the past week, spot prices of imported ferrous scrap in Vietnam declined w-o-w due to limited demand both within the country and across the region. Major steelmakers are hesitant to engage in deep-sea scrap market activities due to sluggish sales of rebars.

The domestic steel market in Vietnam is facing difficulties in the short term, particularly in the northern provinces, which are experiencing rainy season and low construction activity. The low demand for construction steel, combined with the impact of bad weather, are expected to have a significant influence on steel consumption in the near future.

This cautious sentiment is driven by the seasonal lull in production and poor domestic and regional demand, especially impacting the local rebars market. As a result, deep-sea scrap trading is not finding much interest in major Asian markets, including Vietnam.

Bids and offers: For HMS bulk (80:20) in Vietnam, prevailing offers were at around $395-400/t CFR, but most buyers were only willing to pay $385/t, reflecting their cautious and reluctant sentiments.

Offers for H2 scrap into Vietnam were at $385/t, and while some Japanese exporters tried to command higher prices, many suppliers sought prices in the range of $390-400/t CFR.

Trading activities in Japanese scrap in Vietnam remained thin due to bid-offer disparity, compounded by challenging market conditions and limited demand from Vietnamese mills. These factors have affected scrap generation in Japan and are contributing to supply shortages in the region.

Thailand: Other Southeast Asian markets, such as Thailand, continued to remain soft in terms of trading activities with limited action witnessed by traders or buyers. Nominal deals such as 500 t of Australian shredded have been booked at $397/t CFR Thailand as informed by some market sources.

Vietnam Steel Corporation (VNSteel) reported a decline in net revenue by 29% and a 57% drop in gross profit in the April-June 2023 (second quarter) period. The company also recorded a loss of nearly VND 324 billion in joint ventures and associates during the period.

Region-wise steel prices:

• In the northern region, Hoa Phat's rebar brand D10 CB300 decreased to 14,140 VND/kg, and the CB240 coil line was priced at 14,040 VND/kg.
  
  
• In the central region, the Hoa Phat Steel CB240 coil line was at VND 13,840/kg, and the D10 CB300 rebar was priced at 13,990 VND/kg after a 100 VND/kg reduction.
  
  
• In the south, Hoa Phat Steel D10 CB300 rebar was priced at 14,090 VND/kg after a 100 VND reduction, and the CB240 steel coil was at 14,140 VND/kg. VAS steel CB240 coil line was priced at 13,700 VND/kg. Rebar D10 CB300 was also reduced by 100 VND to 13,700 VND/kg.
  
  

Outlook:

The short-term outlook for the Vietnamese ferrous scrap market remains cautious with downward pressure on prices, as mills continue to purchase raw materials as per requirement amid poor domestic and regional demand. The rainy season and low construction activity in the northern provinces further impacted steel consumption, contributing to the prevailing bearish sentiment.