Formosa Ha Tinh rolls over HRC prices in Vietnam despite big pressure on local demand

Friday, 11 June 2021 17:22:33 (GMT+3)   |   Istanbul

On June 11, Vietnamese steel producer Formosa Ha Tinh (FHS) announced that local prices for HRC for July-August deliveries will be stable compared to last month. The move had been awaited in the market. Despite the recent sharp decrease in local HRC demand in Vietnam, the producer has decided not to cut prices amid high raw material prices, stable prices from Baosteel for June, and still strong flat steel demand in Europe and the US.

Formosa Ha Tinh’s prices for re-rolling grade SAE1006 HRC (non-skin passed) to local customers have remained mainly at $1,030-1,035/mt CFR and some offers are at $1,036-1,038/mt CFR, differing from customer to customer.

As SteelOrbis reported previously, in May the producer had hiked its prices by $120/mt.

Demand for both local and import HRC in Vietnam has been very weak over the past two weeks, under pressure from rising infection cases and restrictions in the country. Moreover, the heavy rains are expected to start soon, as the monsoon, which has already hit the Philippines this week, is moving closer to northern Vietnam and China. In such conditions, customers have preferred to book only limited HRC volumes in case of urgent need.

However, Formosa Ha Tinh has also been watching the situation in other markets. Leading Chinese producer Baosteel has announced the stabilization of local prices for this month, which has supported the decision of the Vietnamese producer to roll over prices too. In addition, the situation in the EU and the US markets has remained positive in terms of demand for HDG and, as a result, a section of Vietnamese re-rollers will still be interested in exports of coated steel and will rely on non-China HRC purchases, SteelOrbis understands.

Moreover, "raw material prices are important now. Iron ore is staying at above $200/mt," a local source said.

The import market in Vietnam has been very quiet this week because of extremely weak demand. The latest offers for position SAE1006 HRC from Chinese traders have been at $940-950/mt CFR, slightly lower than $950-970/mt CFR  last week. But no deals have been reported over the past week. Only small tonnages of position HRC strip material from China have been sold at $890/mt CFR, according to sources.

Some position cargoes of SAE1006 HRC have also been available in the local market in Vietnam at $940/mt CFR, while rare bids have mostly not been above $920-930/mt CFR.

But most large mills from abroad have been offering this grade at not below $1,000/mt CFR. A few major Chinese mills have been ready to sell at $1,000-1,020/mt CFR, but as the situation with the expected 11 percent export duty is still unclear, negotiations have been on pause.

Indian mills have been asking for $1,040-1,050/mt CFR, while traders have been ready to deal at $1,020/mt CFR.

The SteelOrbis reference price for import SAE1006 HRC in Vietnam has been at $930-1,000/mt CFR, with the range widening by $20/mt from last week, but the midpoint has remained stable from last week at $965/mt CFR. 

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