Vietnam: Imported HRC offers range-bound w-o-w amid slow demand

This week, imported offers for China-origin hot-rolled coils (HRC, SAE1006) into Vietnam are range-bound w-o-w. Demand has remained slow with no trading activities heard for imported HRC in the country as buyers are in a wait-and-watch mode. In addition, HRC futures (October contract) on China's Shanghai Futures Exchange (SHFE) remained volatile.

Imported HRC offers

• Chinese HRC (SAE1006) offers were heard at $570-575/t CFR, range-bound w-o-w. Meanwhile, offers for HRC SS400 were at around $550-555/t CFR.
  
  
• Indian mills have put their offers on hold for a while now.
  
  
• No offers were heard from Japan, Taiwan, South Korea, and Russia this week.
  
  

Key factors keeping prices stable:

1. Volatile Chinese market: The Chinese HRC market is very volatile currently considering low demand. Similarly, HRC futures for October 2023 contracts on SHFE, too, are showing volatility. For instance, today's settled price for Chinese HRC futures on SHFE dropped RMB 26/t ($4/t) d-o-d to RMB 3,886/t ($533/t). However, prices rose by RMB 7/t ($1/t) as against RMB 3879/t ($532/t) a week ago.

The recent decrease in the loan market quotation rate (LPR) and the support for the real estate market are signs that the country is trying to stimulate demand that has been adversely affected by the typhoon. This has eased market panic to some extent. However, the market performance has fallen short of expectations for a prolonged period which has affected buyers' confidence and resulted in volatility, sources hinted.

2. Subdued demand in Vietnam: Vietnamese buyers are currently standing on the sidelines as Chinese HRC export prices have been moving up in tandem with SHFE futures. Thus, market participants are watching SHFE trends closely. This, in turn, has resulted in limited trade activities in the Vietnamese market.

Outlook
The market's expectation of production restrictions in China is declining. The "production control" policy has been in discussion for some time now, but there is no sign yet of implementation. The current hot metal output and blast furnace operating rates are still high. Moreover, it is too early to say what will happen to the Vietnamese HRC market amid current market volatility.