Vietnam: Imported HRC offers rise w-o-w amid China price rally

Imported HRC offers for China-origin hot-rolled coils (HRC, SAE1006) into Vietnam rose w-o-w amid hike in China's Shanghai Futures Exchange (SHFE) futures for January contract. In addition, production cut and government's stimulus measures to control output is declining Chinese steel inventory and resulting hike in prices. Moreover, Vietnamese steel major, Formosa Ha Tinh (FHS), has increased HRC prices by $20-25/t for January delivery, informed sources.

Imported HRC offers

• Chinese HRC (SAE1006) offers were heard at $570-575/t CFR, up w-o-w against $555-560/t CFR a week ago. Meanwhile, offers for SS400 grade were at $548-550/t CFR.
  
  
• Indian mills are not offering to Vietnam amid higher realisations in the domestic market.
  
  
• No offers were heard from Japan, Taiwan, South Korea, and Russia either.
  
  

Factors impacting Vietnam's HRC market:

1. Chinese futures rise: Chinese HRC futures (January 2023 contracts) on SHFE rose w-o-w along with the increase in domestic HRC prices. Settled prices of HRC futures were at RMB 4,016/t ($554/t)/t) today, up RMB 67/t ($9/t) w-o-w against RMB 3,949/t ($546/t) a week ago. On a d-o-d basis, futures inched up by RMB 10/t ($1/t) against RMB 4,006/t ($553/t).

2. Vietnam's domestic prices improving: Vietnam's domestic prices are also improving, recently, Formosa Ha Tinh (FHS) has increased HRC offers (SAE 1006, skinpass) for January 2024 shipment by around $20-25/t CIF Ho Chi Minh m-o-m. Post-revision, prices for skinpass HRC are in the range of $590-595/t CIF, depending on size of orders. The price increase came amid hike in prices by competitors, for instance, World's top steelmaker, Baosteel has raised HRC prices for December 2023 sales by RMB 100/t ($14/t) m-o-m, sources informed SteelMint. Prices of thick plates increased by RMB 50/t ($7/t) m-o-m.

3. Vietnam steel imports rise y-o-y in Oct'23: Steel imports rose by 56% y-o-y to 1.28 mnt in October 2023 as against 0.82 mnt in the same month last year. However, the same fell by 9% m-o-m against 1.4 mnt in the preceding month.

Outlook:
The government's stimulus measure to control Chinese output might further increase prices as inventories are declining. However, competitive domestic prices in Vietnam as well as limited demand in the country have kept outlook mixed.