Vietnam: Imported HRC preference falls amid bearish sentiments

Demand for imported HRCs in Vietnam continues to remain low, dragging down offers from major exporting nations. The buying preference for domestic products increases amidst concerns arising out of the new Omicorn variant and rising cases in Vietnam.

Current week's imported HRC (SAE1006) offers -

a) Indian HRC offers decreased to around $815-825/t CFR.
b) Russian mills resumed offering at $760/t CFR Vietnam this week for Feb'21 shipments.
c) Chinese mills held their offers at $810/t CFR levels. However, it was heard that mills had withdrawn offers towards the end of the previous week on rising domestic prices.
d) Japanese mill rolled out offers at around $840/t CFR, stable against last week.
e) No offers were heard from South Korea this week.

Market concerned about rising Covid cases: The domestic market activities in Vietnam are still slow despite the lifting of the lockdown in Aug'21. The emergence of Omicron (the new Covid variant) in the country has further increased concerns. As of 5 Dec'21, the daily new covid cases in Vietnam were reported at 14,314 with the steel hub of Ho Chi Minh recording the highest numbers at 1,491, remaining in the medium alert zone, as per the Ministry of Health.

Domestic players look for price announcements: The market participants remaining glued to domestic procurement, are looking forward to the price policy announcements from Hoa Phat and Formosa Ha Tinh for Feb'22 dispatches. Participants expect the announcement to come by the succeeding week.

Hoa Phat achieves 3 mn t HRC output, plans further expansion: The Vietnamese major steel producer had rolled out its first HRC on 2 May'20 and within 18 months, it has achieved the 3 mn t-mark on 2 Dec'21. In the first nine months, the producer recorded 1 mn t while in the next nine months, the output levels doubled to 2 mnt. The mill's annual production capacity is about 3.5 mn t per year. The mill further plans to deploy the Hoa Phat Dung Quat 2 Iron and Steel Complex project in early-2022, adding another 5.6 mn t per annum by CY'25.

Near term outlook
The volatility in the global HRC market amidst lack of clarity on the price direction from Chinese HRC exporters and rising concerns on the spread of the new Covid-19 variant are likely to keep imported HRC offers to Vietnam under pressure. Furthermore, buyers might stick to domestic procurements.