Vietnam: Increasing freight rates worry ferrous scrap suppliers

Vietnam's ferrous scrap market has observed limited trades in the past one week. Japanese scrap suppliers were seen quoting limited offers for Vietnam market on freight rate surge. Trades have remained sluggish as most of the suppliers are in a dilemma to quote fresh offers due to the sharp hike in freight rates in last couple of weeks.

Currently, bulk scrap vessel freight rates from Japan to Vietnam have nearly doubled during the last one month. Freight rates have increased from $25, as assessed a month back, to current levels of $50-60/t, traders highlighted.

• SteelMint's assessment for Japanese H2 bulk scrap cargo stands at $428/t CFR Vietnam basis, registering a drop of $20 w-o-w, tracking global trends.
  
  
• Price indications for bulk USA origin HMS 1&2 grade scrap which were reported around $465/t CFR levels last week have now come down to $450/t CFR Vietnam.
  
  

Domestic scrap prices in Vietnam follow the global cue: Following the slow domestic market sentiments in Vietnam, scrap prices started to follow the global price downtrend after a continuous hike was observed in the previous two weeks. Domestic scrap prices have dropped by VND 300/kg ($13) w-o-w. H2 grade scrap price now stands at VND 9,300/kg ($404) exw against VND 9,500/kg in the preceding week, SteelMint learnt. Whereas, another grade of H1 is now available at VND 9,600/t kg ($417) basis.

Imported scrap trades slow-down in Indonesia: Imported scrap offers in Indonesia slowed down last week due to further correction witnessed in prices. Indonesian buyers are waiting for prices to come down further, as currently, a most preferred PNS scrap grade from Hong Kong is being offered at below $440/t CFR Jakarta basis, down by $10-15 w-o-w.

Thailand's imported scrap market mostly quiet: Imported scrap offers to Thailand remain mostly stable for Central America origin HMS 1&2 (80:20) at $385-390/t CFR Thailand basis. Whereas, continuous drop in offers kept participants away from the market. Auto production numbers have continued to increase for the second successive month in Jan'21.

A total of 155,200 units were produced in Feb'21, up by 5% m-o-m as compared to 148,118 units were recorded in Jan'21, according to the latest report released by FTI (Federation of Thai Industries).

Outlook: Few market sources opine that considering limited offers and hike in freight rates, global scrap prices may see a recovery in the near term.