Vietnam mills scouting HRC export market; Indian producers see short-term impact

Vietnam mills are turning active in the HRC exports market. Even a week back, they were busy selling to domestic buyers and looking at import offers big-time. However, a Covid surge in South East Asia has changed the scenario within a short span of time.

"We heard that two leading Vietnam mills are active in the exports market at present," a trader informed.

SteelMint heard that a major integrated steel manufacturer in Vietnam has reportedly booked 20,000 tonnes (t) of hot rolled coils (HRCs) for exports to Europe. The deal was concluded at around $970/t FoB Vietnam for Sept'21 shipment. The company also exported HRCs to the US at around $1,100/t CFR, but the deal could not be confirmed till the time of publishing this report.

These volumes are nothing to write home about, but the very fact that these mills are eyeing exports indicates their current sense of desperation in these times of lockdowns.

Why are mills scouting for export deals?

• Increase in Covid-19 cases: There has been a sharp resurgence in Covid-19 cases of late in this Asian country which has been weighing on domestic demand and trade-level sales. Ho Chi Minh City, an industrial and steel hub, has been the most impacted. Thus, mills have been saddled with inventory and are turning to exporting HRCs.
  
  
• Dull domestic demand: In a direct impact of the Covid resurgence, domestic demand has become almost nil at present thanks to strict lockdowns. Traders are not procuring material from domestic mills. Because of almost no demand, the appetite for imported HRCs has also dropped sharply. No major deals have been concluded recently. Vietnam's steel production in Jun'21 dropped 12% m-o-m. Jun steel sales dipped 15.4% m-o-m, according to data released by Vietnam Steel Association.
  
  

India impact

HRC export offers from India to Vietnam were hovering at $930-935/t CFR. But, because of the dull demand there, Indian mills may be impacted since they lose a traditional flat steel export market for some time. India exported 0.74 million tonnes of flat steel to Vietnam in Jan-Jun'21, the third highest importing country so far after Belgium and Italy. In Jan-Jun'20, exports to Vietnam were the highest at 1.39 mn t.

Russian mills are offering to Vietnam lower, at around $910/t CFR and Japanese mills have resumed their offers at around $1,010/t CFR.

Chinese futures effect

Meanwhile, Chinese steel futures fell on Monday, with rebar and HRCs both plunging around 6%, after Beijing updated its stand on its carbon reduction programme.

A Politburo meeting chaired by President Xi Jinping, on Friday, said China should avoid "campaign-style" carbon reduction efforts. The new stand could lead to adjustment in output cuts being followed at present and impact steel prices in the short term.

Consequently, China being a market mover, global export offers may remain on the lower side for some time.

Prices as on 8:50 IST, 03 Aug. d-o-d changes indicated against closing price of 02 Aug