Vietnam: Imported ferrous scrap prices unchanged w-o-w; trading sparse amid market uncertainty

In Vietnam, the ferrous scrap market showed caution due to a notable gap between bids and offers. As a result, Vietnamese mills refrained from purchasing any Japanese scrap last week, opting to wait until the following week for better market clarity.

Traders and mills noted lack of bids for seaborne Japanese H2 scrap, which can be attributed to a sluggish downstream rebar market in Taiwan and broader market downturns when China faced declines. This situation led some sellers to export to Vietnam, particularly as South Korea and Taiwan withdrew from the market.

BigMint's assessment for Japan origin H2 scrap remained unchanged for the week at $400/tonne (t) on a CFR Vietnam basis, during the first half of last week, H2 offers stood at $400/t CFR Vietnam for Japan-origin bulk shipments. Correspondingly, H2 bids were heard at $388-390/t CFR Vietnam, with indicative prices towards the weekend rising slightly to $392-394/t CFR Vietnam, all for Japan-origin bulk shipments.

There were expectations of a temporary price decrease, with a gradual recovery anticipated in demand post-Lunar New Year, although not sharply.

BigMint's US origin HMS (80:20) bulk scrap assessment stood at $408-410/t largely stable w-o-w. According to industry sources, US-origin HMS (80:20) bulk scrap indicatives ranging between $408-412/t on CFR Vietnam basis.

Additionally, some sellers were compelled to export due to lack of sales to domestic Japanese mills. This export trend led to increased offers to Vietnam, particularly as South Korea and Taiwan had withdrawn from the market.

Domestic market: In Vietnam's domestic scrap market, prices witnessed a decline as mills exercised caution amidst uncertainties prevailing in the downstream sector and the fluctuating Chinese market after the Lunar New Year holidays. Specifically, prices of type 1 or H2-equivalent 3-6mm scrap in the northern region dipped by VND 100/kg ($0.04/kg) to reach VND 10,100-10,400/kg ($0.40-0.42/kg) in the middle of the preceding week. Meanwhile, in the southern region, prices experienced a similar drop of VND 100/kg ($0.04/kg), settling within the range of VND 9,000-9,700/kg ($0.36-0.39/kg). Vietnamese mills maintained a watchful stance, closely monitoring developments in the Chinese market to assess the sustainability of prices.

Vietnamese steel demand remained stable in the north, with expectations of more government projects shifting south later this year. Mills were cautiously monitoring price movements. In January, Vietnam experienced a notable decline in ferrous scrap imports. This was mainly due to reduced shipments from Australia and Japan, caused by trading pauses and market fluctuations.

On the other hand, imports from Hong Kong saw a significant surge, driven by competitive prices. Despite this decline, y-o-y comparisons showed an overall increase in scrap imports, driven by stronger local market demand, especially in the construction and high-quality steel sectors, compared to the same period last year.

Freight hike: Traders raised concerns over a 10% increase in terminal handling charges imposed by shipping companies this month, compounding challenges amid heightened tensions in the Red Sea. The Vietnam Shippers Council, representing exporters and importers, expressed their grievances in a letter to relevant government agencies.

Phan Thong, the council's general secretary, underscored the persistent issue of foreign shipping companies unilaterally raising charges without approval, establishing a monopoly in Vietnamese trade. This month, terminal handling charges for a 40-foot container surged from $180-190 to $200-210, alongside 10 other additional fees ranging from $9 to $100 per container. Traders also accused shipping firms of exploiting Red Sea tensions to justify these hikes.

In response, shipping firms attributed the increases to longer routes necessitated by tensions, resulting in escalated costs. Despite assertions by firms like Hyundai Merchant Marine and Ocean Network Express that these hikes are market-driven and transparent, the Vietnam Shippers' Council insisted on authorities mandating transparent fee notifications and considering taxing windfall profits from shipping firms.

Outlook: Imported ferrous scrap prices from the US into Vietnam are expected to continue their downward trend, mirroring the decline observed in bulk scrap rates from the US to Turkiye. Additionally, H2 scrap from Japan is priced higher than what buyers prefer, further contributing to the downward pressure on prices, especially considering the sluggish steel market conditions.