Vietnam: Imported HRC offers continue uptrend

Imported HRC offers for Vietnam have continued to rally on the back of hike in offers from major exporting nations - China, Japan, and South Korea. Offers have strengthened by around $10-15/t w-o-w, SteelMint learned from its trade sources.

Current HRC (SAE 1006) offers for Vietnam -

• Japan based Nippon Steel and JFE Steel are offering at $550/t CFR
  
  
• South Korean based Hyundai Steel is offering around $545/t CFR
  
  
• Chinese steel mills have also raised their imported HRC offers sharply by $15/t and current offers are at $550/t CFR basis
  
  
• Few Indian steel mills have kept their HRC export offers on hold since the mills are already booked for Oct shipments, trade sources highlighted. Last week a major Indian steel mill booked around 10,000 t HRC to Vietnam at $535/t CFR basis for Oct shipments. Also, mills are trying to limit their export orders amid a revival in domestic demand.
  
  

HRC export offers have surpassed pre-pandemic levels- HRC export offers have crossed pre-pandemic levels on strong domestic demand and the reduction in production by steel manufacturers in each country during the lock-down period. However, demand in overseas markets excluding China has not reached the level before corona, but supply and demand has tightened due to a decline in Chinese exports and an increase in imports.

Factors driving imported HRC offers to Vietnam:
1. Improved bids- End users based in Vietnam are ready to accept the imported HRC offers over $540/t CFR basis which in turn pushed mills globally to raise offers.

2.Increase in raw material costs- The higher cost of production is due to increase in raw material prices viz. coal and iron ore which lead to increase in HRC export offers. The latest offers for the coking coal Premium HCC grade are assessed at around $111.00/t FoB Australia, as against $108.25/t FoB in the previous week. Meanwhile, Chinese spot iron ore fines price hit over 6.5 years high and was assessed at over $130/t CFR China for Fe 62% fines last week.

3. Improved demand in local markets- All the major steel exporting nations have shifted their focus to their domestic markets on robust demand and are less interested in exports. Thus, limited allocations resulted in an upside in offers in the export market.

Outlook- Considering that the demand will improve in the future, there is a growing view that the strong trend will continue within the year. China will enter the national holidays and India will enter the demand season at the end of the monsoon, and higher iron ore prices are likely to support the HRC market.

However, towards end of this month - Hoa Phat steel in Vietnam to commence its HRC sales by the end of this month in the local market.This may lead to increased domestic HRC availability in the coming months in Vietnam. It would be interesting to see how HRC demand-supply shapes up in Vietnam in coming months.