Vietnam: Limited buying interest weighs on imported HRC offers

Imported hot rolled coil or HRC (SAE1006) offers into Vietnam continued to remain under pressure from most of the overseas suppliers. Limited buying interest, and continuous decline in Chinese HRC futures has dampened market sentiments in Vietnam.

HRC (SAE1006) offers from major exporting countries:

• China: $680/t CFR from tier II mills, down $10/t from $680-690/t in the previous week.
  
  
• India: $670/t CFR, down $30-40/t from $690-710/t CFR a week back.
  
  
• Russia: $610/t CFR, down by $30/t from $640/t a week ago.
  
  

Factors weighing on the preference for imported HRCs:

• Limited buying interest: Buying interest for imported HRCs has taken a hit amidst high inventories in the market. Buyers continue sticking to domestically produced HRCs and switching to imported ones when the former dries out. Major concerns that have led to higher preference for domestic HRCs are long delivery lead times, and continual decline in global prices.
  
  
• Continual decline in global HRC prices: Prices of HRCs on the global trade platform have been correcting since April 2022. For instance, HRC (SS400) export offers from China have dropped by a significant $260/t to $675/t FOB as assessed on 28 June 2022, compared to $935/t FOB on 12 April 2022. Moreover, Indian HRC (SAE1006) export offers received this week are closer to $650/t CFR as assessed on 8 December 2020. The analysis is based on the historical data maintained with SteelMint.
  
  

Also, today's Chinese SHFE HRC futures were at RMB 4,232/t (October contract), correcting by RMB 118/t ($18/t) d-o-d.

• Competition increases amongst exporting countries: The re-entry of Russia in the Southeast Asian markets with highly competitive offers has also weighed on offers from other exporting countries. Russian mills, along with the Japanese and South Koreans have remained inconsistent in offering HRCs to Vietnam for most of the CY2022.
  
  

Thus, witnessing correction in HRC prices, Vientamese buyers are expecting further decline in upcoming weeks. Moreover, domestic steel manufacturers Formosa and Hoa Phat are likely to announce their prices for September and early-October deliveries in the next 10-15 days. This is another factor keeping the buyers on side lines.