Vietnam: Imported scrap offers up further, subdued demand limits trade

Vietnam's imported scrap market improved slightly this week. Offers continued to move north for yet another week. As a result, very few deals were heard to have been concluded last week, along with the domestic finished steel market remaining unsupportive. Buyers and steel mills are largely still not ready to accept high offers.

Indicative fresh offers for bulk Japanese H2 are now set at $410-415/t CFR basis, moving up a significant over $20/t w-o-w. Around 15,000 t of Japanese H2 were heard to have been booked at $397-400/t earlier last week.

However, no firm offers were heard from US suppliers of bulk HMS.

"Demand for high-grade Japanese scrap has increased mainly in South Korea and Japan's domestic markets, while Vietnam buyers remain sidelined due to limited demand for finished steel," said a reliable Vietnam-based source. "Additionally, credit issues from banks kept buyers inactive in the market. The economy is still in a very bad situation and hence real estate and industrial sectors are impacted ," he added.

Vietnam fomestic scrap prices at workable levels: Domestic steel mills preferred to buy domestic materials as procurement prices for domestic scrap remained at workable levels. Domestic H1 and H2 grades wereat VND 9,500-9,700/kg ($413-422/t) and VND 9,700-10,000/kg ($422-435/t), respectively.

On the other hand, domestic rebar prices increased slightly to VND 14,500/t exw ($630/t). Increase in domestic rebar and other construction material prices has slowed down domestic construction activities.

Vietnam's billet export offers inch up: Vietnam's BF-grade billet export offers stood at around $530-540/t FOB, up by $10-20/t w-o-w. According to market sources, trade activities were mostly absent last week, and demand for semi-finished was also subdued. However, a hike in scrap prices pushed up billet offers. Meanwhile, some industry participants found domestic prices of billets ruling at around $550/t exw, more attractive.

Overview of other SE Asian scrap markets

• Thailand: Indicative offers for South American-origin HMS 1&2 (70:30) were at $330/t CFR Thailand, up by $10/t w-o-w.
  
  
• Indonesia: Imported scrap offers for Hong Kong-origin PNS (rebar mix) was being offered at $455/t CFR Jakarta basis. Meanwhile, Australia-origin shredded was being offered at $440/t CFR level.
  
  

Outlook: Imported scrap prices into Vietnam are likely to move up further because Japanese and Korean mills are buying scrap for heavy plates manufacturing. This sentiment may also push up imported scrap prices into Vietnam. However, the market needs some time to recover as demand has remained subdued for quite some time.