Vietnam: Imported scrap trade absent on bearish market trend

Imported scrap prices in Vietnam have fallen as a result of bearish sentiment in domestic markets, which were influenced by the weak demand in downstream sectors.

Offers for Japan-origin bulk H2 scrap slid by $5/t to $410-415/t CFR Vietnam from last week, given worsening sentiment in the domestic and overseas markets. Vietnamese buyers expect prices to go down to around $400/t CFR. Meanwhile, Japan's domestic prices also declined last week, following the Kanto scrap export tender, which concluded at lower prices by $37/t m-o-m.

On the other hand, USA origin bulk HMS 1&2 (80:20) was at $415-420/t CFR, unchanged w-o-w, however, buyers' interest remains subdued.

Suppliers believe that there were no firm bids from Vietnam at all, and the market may remain quiet for the near term. However, due to high inventory with mills, steelmakers are less likely to resume their booking soon.

Due to limited demand, the country's BF-grade billet export offers remained unchanged at $530/t FOB. No active deals were reported on these offers.

Additionally, the Vietnamese steel major, Formosa Ha Tinh, has reduced HRC prices by $40/t m-o-m for June 2023 shipments. Subsequent to the revision, the price of HRC (SAE1006, skin pass) stood at $692/t CIF Ho Chi Minh City. Meanwhile, non-skin pass coils are assessed at around $682/t CIF. Due to the poor demand in the domestic market, steel producers are under pressure to lower their finished steel prices.

Outlook: Steel producers are hopeful that demand for finished steel products may improve significantly, as the Minister of Transport said that to develop the railway network for 2021-2030, with a vision to 2050, the ministry has proposed increasing medium-term public investment and prioritising major railway projects to enhance transport connectivity and reduce logistics costs during 2021 - 2025.

Many foreign investors have expressed their interest in railway projects in Vietnam amid the Ministry of Transport (MoT)'s efforts to attract private and foreign investment in railway infrastructure, as per reports.