Vietnam: Imported scrap offers largely stable w-o-w; buyers await clear price trend

The Vietnamese market remained stable as buyers await clearer picture amid ongoing fluctuations in global scrap prices. Japanese-origin import prices for scrap in Vietnam were relatively stable, with a slight recovery in demand but an overall weak characterisation, as per a source from a Vietnamese mill.

Specifically, Japanese-origin H2 offers were at $400/t CFR Vietnam stable as compared to last week, with indicative bids aligning at $395/t CFR Vietnam. Additionally, a mid-week deal for H2 was confirmed at $400/t CFR Vietnam, Japan-origin, in bulk. Further tradable value for H2 at $390-395/t CFR Vietnam for Japan-origin bulk and an indicative bid of $390/t CFR Vietnam for H2 scrap.

A US-origin HMS (80:20) bulk offer was noted at $415-420/t CFR Vietnam, slightly up by $5/t w-o-w. HS offers stood at $430/t CFR Vietnam, while bids and the mill's tradable levels held at $420/t CFR Vietnam consistently during the week.

Despite a slight decline from pre-New Year levels, mills continue importing due to insufficient domestic supply, with a slight sign of recovery in terms of market activities, as per a Vietnamese trader.

Domestic market: Vietnam's domestic scrap prices remained steady with limited procurement activity and slightly weak demand. Buyers exercised caution, adopting a wait-and-see approach due to a recent fluctuation in global scrap prices. Bearish economic sentiment further subdued spot procurement, with induction and blast furnaces more active than electric arc furnaces, which operated at low capacity.

In north Vietnam, "Type 1" scrap prices were at VND 9,500-9,700/kg ($388-396/t), and in southern Vietnam, prices ranged from Dong 8,850-9,150/kg ($362-374/t). Despite some improvements, market sentiment remained cautious, with industry players favouring minimal inventory levels.

Formosa Ha Tinh (FHS), a major player in the Vietnamese steel industry, has implemented a monthly increase of $20/t for Hot Rolled Coils (HRC) for shipments from late March to early April 2024, based on the booked quantity. Following this adjustment, HRC prices (SAE1006, skin pass) are now in the range of $645-655/t CIF Ho Chi Minh City, while non-skin pass coils are assessed at approximately $640-650/t CIF.

Hoa Phat Group (HPG), a top steel producer in Vietnam, saw a 7% monthly sales increase to 760,000 t in December, following a 12% rise in November. The growth is attributed to heightened construction activity, with construction steel and high-quality steel achieving their highest sales levels in the past 20 months. Positive signs are emerging in the domestic market, including the civil sector and public investment projects, after a period of relative quiet.

VinFast, Vietnam's electric vehicle (EV) manufacturer, has signed an agreement with the Indian Tamil Nadu state government for the construction of an EV plant in the region. The plant is expected to have an annual capacity of up to 150,000 units, and construction is set to commence in 2024.

Exchange rate and VN Index: The U.S. dollar strengthened against the Vietnamese dong, rising 0.48% to VND24,970 on the black market, while the State Bank of Vietnam maintained its reference rate at VND23,992. Year-to-date, the dollar has increased by 0.94%. Vietnam's VN-Index declined marginally to 1,154.12 points, with trading on the Ho Chi Minh Stock Exchange decreasing by 44% to VND12.66 trillion ($516.63 million).

The Vietnamese steel sector is poised for a positive 2024, driven by anticipated economic growth and project realisation. The Vietnam Steel Association (VSA) predicts a 7.4% rise in steel consumption to 21.67 million tonnes (mnt) and a 6.7% increase in production to 29 mnt. Government policies promoting public investment aligned with accelerated economic growth, contributing to the optimistic outlook.

GDP forecast: The government aims for a 6-6.5% GDP increase in 2024, while the IMF forecasts 5.8%. Steel sales are expected to grow, supported by ongoing large-scale projects.

Outlook: Vietnam's market sentiments are expected to remain positive due to improved demand and factors like higher raw materials and imported offers. Looking ahead, some traders expressed the belief that domestic prices are likely to find support in the short term.