Vietnam's steel exports surge 55% y-o-y in Jul'21

Vietnam's steel exports across categories touched 6.58 lakh tonnes in Jul'21, up almost 6% m-o-m over Jun'21 and up a substantial 55% over the same period in Jul'20, according to data released by Vietnam Steel Association.

Reasons for rise in steel exports

Vietnam has been experiencing a consistent rise in Covid cases and July was a bad month in terms of the pandemic that led to severe lockdowns, leading to a lull in economic activities. The lockdowns have been extended till 4 Sept'21. The pandemic has severely dented domestic demand, making mills look at exports aggressively. As a result, one of Vietnam's leading mills was recently heard to have lowered its billet export offers by $40/tonne. Another mill cut its HRC offers by $15/t in the current month. Earlier, in July it had reduced its offers steeply by $60/t for Sept'21 deliveries. Lowered offered show the desperation to offload inventory. The slump in domestic demand led to a $20/t decline in imported HRC offers this week.

Manpower availability and logistical barriers are further adding to a dull domestic market.

Steel production: Steel production in Jul'21 touched 2.4 million tonnes (mn t), down 6.48% over the previous month but up 13.8% over Jul'20.

Steel sales: Steel sales across categories were at 2 mn t, equal to the level seen in Jun'21, but up 7.4% over the same month in 2020.

Steel production and sales were both impacted in the month under review because of lack of domestic demand. Sales have remained flat m-o-m while production was down m-o-m.

Outlook

Vietnam is experiencing a Covid surge which is showing little signs of abating even in August, leading to an extension of the lockdown till 4 Sept'21. This means economic activity will also be at a low ebb, further impacting demand in the short term. Mills thus have to keep scouting for export bookings to offset the lack of domestic demand.