Financial and currency market overshadows Vietnamese steel trade

Thursday, 26 November 2009 08:37:08 (GMT+3)   |  
       

Ex-Taiwan HRC offers to Vietnam are currently at $560/mt CFR for 1.95 mm material, indicating an increase of $25/mt compared to three weeks ago. Meanwhile, ex-Japan offers to Vietnam are at $555/mt CFR for 2.30 mm HRC.

On the other hand, SteelOrbis has been informed that traders' offers for ex-China (Shougang) SS400 grade HRC of 4-12 mm thickness are at $500/mt CFR Vietnam, reflecting a $10/mt increase compared to three weeks ago. Meanwhile, Chinese steelmaker Baotou Steel is offering 4-12 mm HRC of SS400 grade at $520/mt CFR Vietnam for January shipment, whereas the same origin HRS offers to Vietnam for 4-12 mm x 1,500 mm of SS400B grade are at $510/mt CFR Vietnam, also for January shipment.

Significantly, however, Vietnam is not responding to the recent increases in HRC offers due to financial and currency issues. As indicated by Bloomberg sources, the Vietnamese currency has weakened to a record low against the US dollar, the danger of inflation is increasing and foreign exchange reserves have declined. In particular, Vietnam's foreign exchange reserves fell to about $16.5 billion in August, from $23 billion at the end of 2008, due to moves by Vietnam's central bank to try to stabilize the currency, the World Bank said in a semi-annual report issued this month.

In conclusion, while importing steel to Vietnam already involves a considerable risk for traders due to the high level of flat steel inventories, the financial and currency market makes life even more difficult on the import side.


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