Vietnam: Imported scrap prices marginally up w-o-w amid lacklustre domestic market

Vietnamese domestic ferrous scrap prices increased slightly in the face of a lacklustre downstream market and power shortages. Demand in the imported scrap market is expected to remain sluggish as local mills opt for domestic sourcing due to high import prices. Downstream demand remains weak, with price reductions observed in wire rods and other finished products. Limited scrap quantity is also contributing to a lack of trading activity.

Scrap demand in Vietnam remains lacklustre, particularly in the northern region, where power shortages have led to production cuts of approximately 50-60%. In the southern region, electric arc furnaces (EAFs) continue to operate at only 30%-40% of their designed capacities.

Despite the optimism shown by the scrap exporters, buyers in Vietnam are displaying hesitancy due to weak construction activity and declining prices for longs. There was no trade in Vietnam this week, and suppliers were rigid with their scrap volumes.

• Offers for US-origin bulk HMS 1&2 (80:20) increased by $10/t and currently stand at $420/t CFR Vietnam.
  
  
• Japan-origin H2 bulk scrap offers were reported to be at around $395/t CFR, showing a slight hike of $5/t w-o-w.
  
  

Other updates:

Scrap exporters to Vietnam continued to be bullish, but buyers were not ready to accept the new price levels. Given weak construction activity in the country, longs prices have expectedly dropped.

The extension of EU tariffs on Vietnamese steel exports for another year aims to safeguard against imports, while construction steel prices have dropped due to weak demand. However, the price reduction has contributed to increased production and sales in recent months.

In Thailand, deals for 500 tonnes of shredded scrap were reportedly concluded at $400/t CIF on an LC basis.

EU extends tariffs for another year: The European Union (EU) has extended tariffs on Vietnamese steel exports for another year. The EU has decided to extend tariffs and quotas on various types of steel imports from Vietnam until the end of June 2024.

According to the World Trade Organization's Safeguards Committee, the EU has extended safeguard measures for an additional year, starting from 1 July 2023, until 30 June 2024. These measures apply to certain types of steel imported under tariff rate quotas.

Construction steel prices down: Prices of construction steel have dropped by VND 200,000 ($8.50)/t, and companies like Hoa Phat, Viet Y, Viet Duc, and Viet Nhat have cut prices by a cumulative VND1.5 million since early April. The Vietnam Steel Association attributed the lower prices to weak demand.