Vietnam: Imported HRC offers from China rise further by $35/t

Imported HRC offers into Vietnam from China have been on a continual rise since the end of Jan'22 when offers were around $790/t CFR Vietnam. This week, offers have risen further by $30-35/t to $945-950/t CFR Vietnam from the levels of $910-920/t CFR Vietnam towards the end of the last week.

Country-wise offers to Vietnam:

Chinese mills turn active on slower domestic demand: Chinese mills have turned active in the South East Asian market since the beginning of Mar'22, with a couple of bookings made to Vietnam in the preceding week, SteelMint reported. Export volumes for both the deals were at 20,000 t each while deals were sealed at $860/t CFR and $900/t CFR for April- early May shipments.

With the Winter Olympics getting concluded in Feb'22, production restrictions were sligthly eased while a slight slow down in the domestic market activities made mills to shift their focus to exports. China's domestic demand is still weak but its production is rising, compelling mills to divert a significant portion of the production towards exports. According to data from the China Iron and Steel Association, in late February, the average daily output of crude steel by key steel enterprises was 2.079 mnt. In the second half of February, the average daily steel output of key steel enterprises was 2.091 mnt, an increase of 15.57% m-o-m and a y-o-y decrease of 12.62%. The 10-day crude steel production of key steel companies increased significantly in late February, as per CISA.

Japanese mills' offers still remain on higher side: The Japanese steel mills continued to offer at elevated levels with the current week's offers being heard at around $970-980/t CFR. Moreover, the focus on catering to the increasing demand from the shipbuilding industry, has discouraged export activities by and large.

Indian mills stay glued to European markets: Indian steel majors have shown reduced interest in the South East Asian markets lately. Higher realisations being fetched from exports to European countries have grabbed the mills' interest. Meanwhile, the mills have been holding off from offering in the Vietnamese market since the beginning of March with the emergence of the Russia-Ukraine geo-political tension.

Near-term outlook
With Indian steel majors concentrating on the European market, while Japanese and South Korean mills focussing on catering to the shipbuilding industry demand, there is limited competition for the Chinese mills in the Vietnamese market. Thus, it is likely that more deals would be concluded between China and Vietnam in the upcoming weeks, with offers moving up with each new export booking getting concluded.