Vietnam: Slow demand weighs on imported HRC offers; buyers await domestic price revision

The HRC import market in Vietnam continued to remain under pressure this week amid low buying interest, even for the domestic products. Offers from China dropped about $50-55/t. Meanwhile, Vietnamese buyers are now waiting for domestic mills to announce their monthly price revision.

Offers from major exporters

• China HRC (SAE1006): Offers dropped to $500-510/t CFR from previous week's $555-560/t
  
  
• Japan HRC (SAE1006): Offers were heard at around $530/t CFR. The last heard offer was $560/t CFR a couple of weeks back.
  
  
• Taiwan (SAE1006): Offers were at around $525/t CFR.
  
  
• No firm offers were heard from South Korea or India this week.
  
  

Factors impacting Vietnamese HRC market

Slow sales momentum: The momentum of sales has remained slow in the both domestic and overseas markets. For instance, major integrated steel producer Hoa Phat has reported a 11% m-o-m drop in sales figures of steel (including construction steel, HRC and billets) to 0.492 mnt in October. Meanwhile, the decline on an annual note was a steep 42%, as per company sources.

Exports of steel products also remained slow in 2022, staying below the 1 mnt mark during January-September. Slower recovery of the Vietnamese economy in the initial few months of the year followed by the weakening of global market prices since April posed a major challenge for the steel market. Also, buyers remained on the sidelines amid the appreciation of the dollar against other currencies, while exporters are trying to entice buyers with lower offers.

Moreover, the past few months have seen import volumes drop. Imports have been on a continual decline since June. In September, the import volumes of steel products dropped to 0.78 mnt, as per Vietnamese customs data.

Absence of competition: The Vietnamese imported HRC market mostly saw Chinese mills remaining active this year. There were Indian mills competing with the Chinese until the 15% export duty on non-alloyed flat steel products was imposed on 21 May. The Japanese and South Korean mills were primarly focused on their domestic markets in the first few months and later, with prices weakening, turned inconsistent with offers. Thus, Vietnamese buyers had only two options, either the Chinese or domestic HRC producers.

Buyers move to sidelines: Vietnamese buyers have remained on the sidelines watching out for January and early-February price announcements by Formosa Ha Tinh and Hoa Phat. Weakening of global HRC prices, an appreciating dollar and slower exports from Vietnam might weigh on domestic prices, sources highlighed.