Vietnam: Imported HRC offers drop w-o-w; Formosa cuts prices

This week, imported offers for China-origin hot-rolled coils (HRC SAE1006) into Vietnam dropped $5-10/tonne (t) w-o-w. The Vietnamese HRC market remained sluggish. Formosa Ha Tinh (FHS) revised prices down after announcing a hike early last week considering lower offers from China, as well as weaker market sentiments in Vietnam.

Imported HRC offers

• Chinese HRC (SAE1006) offers were heard at $570-575/t CFR against $580-585/t CFR last week. Meanwhile, offers for HRC SS400 were at around $550-555/t CFR.
  
  
• Indian mills have not been offering to Vietnam for a while.
  
  
• No offers were heard from Japan, Taiwan, South Korea, and Russia this week.
  
  

Key factors driving prices down:

1. Chinese market sluggish: The Chinese HRC market is volatile at present considering low demand and fluctuating SHFE futures for October 2023 contracts which are active at present. For instance, today's settled price for Chinese HRC futures on SHFE dropped RMB 21/t ($3/t) w-o-w to RMB 3,879/t ($534/t). Prices dropped by RMB 31/t ($4/t) d-o-d.

The typhoon Doksuri has adversely affected the demand cycle in China. Construction activities, both civil and infrastructural, has remained lacklustre owing to heavy rains. Meanwhile, Chinese steel exporters and importers are concerned about the impact of possible production curbs. For instance, the country's steel inventory grew by 1% to 16.051 mnt in early August as against 15.893 mnt in early July, as per CISA data. This, despite the 3.9% decline in crude steel production to 2.152 mnt in early August compared with early July.

2. Formosa withdraws Proposed HRC Price Increase in Vietnam: Vietnam's Formosa Ha Tinh (FHS) has revised HRC (SAE 1006, skin pass) offers downward for late September-early October by around $15/t CIF m-o-m. Post revision, prices are at around $610/t CIF for skin-passed material. The company has lowered offers after the initial hike announced was just four days ago in view of lower import offers from China.

Outlook
Volatility in Chinese SHFE HRC futures has instilled uncertainty in the market. In addition, it is still unclear when Chinese steelmakers will begin to cut steel production, as no official notification has been released yet. This is expected to keep market sentiments mixed in the near term.