Vietnamese imported HRC market remains slow; offers from exporters rangebound

Demand for imported HRC continues to remain slow in Vietnam. Offers for HRC (SAE1006) remain firm in China while there are still no firm offers from Indian mills except only indications. The slow recovery of the Vietnamese market and the challanges faced by domestic producers as regards sales pressure are the major setbacks.

Imported HRC offers into Vietnam

• • India (SAE1006): Indications are heard at around $610/t CFR.
    
    
  • China (SAE1006): $610/t CFR (from tier I or II mills), unchanged since last week.
    
    
  • Japan (SAE1006): Previous week's offers are at around $610/t CFR.
    
    
  • Taiwan (SAE1006): $590/t CFR was heard a week back.
    
    
  • China (SS400): $570-580/t CFR depending upon mills.
    
    
  
  
  

Market condition in Vietnam

Slow demand pulls down bid levels further
Domestic steel manufacturers reduced their offers for October and early-November sale contracts in mid-August to incite buying interest but failed. Formosa Ha Tinh offered skinpassed HRC (SAE1006) at $610/t CIF HCMC, while Hoa Phat reduced its non-skinpassed HRC (SAE1006) offers to $595/t CIF.

Limited demand from the importing countries for valued-added Vietnamese flat steel produces has eventually dented downstream demand. Also, offers from exporting countries are still higher compared with those of the domestic mills, adding to the formers' woes. This has resulted in the buying price idea (bids) dropping further low to $565/t CFR Vietnam from the previous week's $575-580/t CFR levels.

Indian HRCs are another story. The already weakened demand for Indian-origin HRC because of competitive offers from other countries was weighed down further by boron-added HRC that Indian mills have been offering since mid-June.

Exporters keen to hike offers: Major exporting countries such as India, China, Japan and South Korea are looking to increasing their overseas offers. This is evident from the export indications of India and China, which have changed marginally in the past few weeks.

However, low demand and weak momentum of Chinese HRC futures for January 2023 contracts are roadblocks to raising offers. For instance, Chinese HRC futures on SHFE closed today at RMB 3,713/t.

Moreover, production cuts taken by Indian and Chinese mills on different grounds have also not been a supportive factor either. Whereas Chinese mills have opted for reduced production majorly for emission controls, Indian counterparts took cuts to help support prices in both the domestic and overseas markets.

Near-term outlook
Entering into September, Vietnamese market participants are now awaiting price announcements from the domestic steel producers for November and early-December sales. Meanwhile, the major exporters are trying to raise offers while the demand growth remains low apprehending that a further decline in prices is likely to keep offers under pressure in the near term.