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Vietnam- Imported HRC market to remain quiet on upcoming Tet holidays

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BigMint Bureau

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8 Feb 2021, 19:14 IST

Vietnam- Imported HRC market to remain quiet on upcoming Tet holidays

Imported HRC offers to Vietnam from China reported an increase of around $15-35/t w-o-w. Chinese mills raised the HRC export offer after the market speculation that export rebate was being cut to 8% from 13%. However, trades continued to remain subdued in Vietnam amid the upcoming Tet holidays.

Movement in the market remained quiet due to the following factors:

1. Conditional offers from Chinese mills- The imported HRC offers from tier 2 mills in China went up to $670-690/t CFR Vietnam from $655/t a week ago. Meanwhile, a major steel producer continued offering at the higher end at a $710/t CFR basis. Anticipated cut in export rebates has led to higher HRC export offers from major Chinese steel mills.

Chinese Govt. is planning to make this move to curb steel output, decrease exports and utilize the material domestically. Due to these measures, few mills have introduced a new clause of loss to be borne partially or fully by the buying party in case the rebate cut is enacted by the government.

Thus, the absence of clarity and conditional offers resulted in mute trades in the Vietnam market

2. Formosa rolls over prices- Formosa Ha Tinh, on 4 Feb '21, announced the pricing policy for April deliveries and has kept the offers unchanged on weak market sentiments due to upcoming holidays and resurgence of COVID cases in the country. Local sources indicate that local offers are comparatively higher than prevailing imported HRC offers.

3. Limited alternatives for imported HRC- Few exporting countries like India, South Korea and Japan have remained inactive in offering HRC to the Vietnamese market due to strong demand in their local markets.

4. Chinese lunar/Tet new year holidays- Chinese Lunar New year holidays are commencing from 11th Feb'21 onwards till 17th Feb'21. Thus, market participants are in a holiday mood and few have made an early exit from the market. Meanwhile, Tet holidays scheduled in Vietnam from 10th Feb'21 resulted in delayed purchases from importers since there is less time left to issue LCs. This has dampened buying sentiments in the market.

Will trade activities rebound post-holidays?

SteelMint foresees that trade activities are expected to increase post-Lunar/Tet New Year holidays. Also, as per Vietnam iron and steel data compiled by SteelMint, in Feb'20 imports stood at 1.02 mn t which touched to 1.33 mn t in Mar'20. A similar trend was observed in CY19 where the import volumes were 0.864 mn t in Feb'19 which touched 1.35 mn t in Mar'19.

Also, market sources shared with SteelMint that there are indications that Indian mills may increase HRC export allocations to Vietnam by the end of Feb '21 if trades remained bearish in the domestic market.