Vietnam: Imported ferrous scrap prices trend down amid bid-offer disparities and weaker finished steel demand

Vietnam's scrap prices continue to trend down as buyers remain cautious, hoping for further declines. The downward price adjustments can be largely attributed to weaker exports of finished products. The prevailing political situation in Vietnam has exacerbated these issues due to delays in infrastructure investments.

Many suppliers are adopting a risk-averse approach and prefer to wait for a clearer market outlook before making decisions. However, some suppliers are willing to lower their offers to secure orders quickly.

In the face of reduced demand for rebar and billets, Vietnamese mills are not rushing to replenish their stocks at this time. Restocking activity remains minimal, with most mills opting for domestic scrap due to its significantly lower cost, averaging around $360/tonne (t).

Bids and offers: Bids were at around $395/t CFR earlier last week but have since decreased to approximately $380-385/t. Offers were heard at the range of $390-395/t CFR in Vietnam recently. Market participants suggest that workable price levels for US-origin HMS (80:20) bulk material buyers are within the $380-385/t range this week.

Offers for Japanese H2 are heard around $375-380/t CFR Vietnam, while bids are in the range of $365-375/t CFR at present. Workable levels are roughly $370-375/t, according to market participants. The persistently low demand is making it challenging to finalise new deals, and buyers are anticipating further price drops.

One of Vietnam's largest hot-rolled coil (HRC) producers has reduced prices for December shipments due to weak demand and competition from cheaper imports. Imported offers for China-origin hot-rolled coils (HRC SAE1006) into Vietnam have declined by $5-10/t w-o-w to $550-555/t CFR Vietnam amid subdued domestic demand. Formosa also lowered its HRC (SAE1006, skin pass) prices last week by approximately $15/t m-o-m for December 2023 shipments.

Vietnam's economic growth improved, rising to 5.33% in the third quarter compared to 4.05% in the previous quarter, according to official data.

However, Vietnam's benchmark VN-Index fell by 1.31% to 1,093.53 points. The index concluded 14.50 points lower after gaining 20.18 points in the previous session.

The US dollar strengthened against the Vietnamese dong, with Vietcombank selling the dollar at VND24,760, a 0.24% increase from the previous day. The State Bank of Vietnam lowered its reference rate by 0.08% to VND24,090. On the black market, the dollar rose by 0.04% to VND24,640, marking a 4.34% increase against the dong since the beginning of the year.

Outlook: The outlook for Vietnam's scrap market suggests that prices are likely to remain under pressure. Weak demand for rebar and billets, coupled with reduced interest in imported scrap due to cost considerations, may continue to weigh on scrap prices. Buyers will likely remain cautious, holding out for further price drops.