Following significant decreases in HRC import offers seen at the beginning of this week, by the end of the week signs of rising prices have emerged in Vietnam as Chinese exporters, who have been the most active sources of import HRC supply to Vietnam, have withdrawn their low offers given the better mood in China.
More specifically, as SteelOrbis reported earlier, on Monday, October 31, ex-China SS400 HRC offers tumbled by $35/mt week on week to $500/mt CFR, which resulted in several deals signed at as low as $490-495/mt CFR. However, by the end of the week, most Chinese suppliers have decided to go higher amid increases in futures prices. Thus, by Friday, November 4, offers for ex-China SS400 HRC have settled at around $510/mt CFR. Furthermore, ex-China SAE1006 HRC prices, which had decreased in new deals to as low as $510/mt CFR, down by $20-40/mt from last week, by Friday have also rebounded to $520-540/mt CFR.
The rebound is explained by the increase in ex-China HRC futures prices, which by Friday, November 4, have gained RMB 185/mt ($26/mt) since Monday, October 31, and are up by RMB 110/mt ($15/mt) over the past week, reaching RMB 3,640/mt ($502/mt) for delivery in January. “Chinese futures are increasing as the United States Federal Reserve raised interest rates and there are also some rumors about Covid-19 policy changes in China,” a market insider said.
In the meantime, offers for SAE1006 HRC from Japan and Taiwan have been voiced at around $540-550/mt CFR, down by $10-20/mt week on week. However, according to market insiders, talk about a deal for 5,000/mt of ex-Taiwan SAE1006 HRC at $510/mt CFR has been circulating in the market this week. “If they [Taiwanese suppliers] really sold HRC at this price [$510/mt CFR], they lost about $80/mt,” a Vietnamese mill’s representative said SteelOrbis.
Meanwhile, most Vietnamese customers agree on a further weakening of steel demand in the country, given the talk that many mills will close their factories for big maintenance works from November untill next February. In particular, according to market insiders, Vietnamese HRC producer Hoa Phat Group will close its first blast furnace in November, and in December two more furnaces will be also closed for maintenance, while Formosa Ha Tinh Steel is likely to do the same at the end of January, during the Lunar New Year. This information has not been officially confirmed by the companies by the time of publication. “Steel mills are under high pressure from production costs and low demand. It is not easy, but it is a good choice to reduce the capacity and production, instead of selling at any cost at a huge loss,” a Vietnamese flats manufacturer told SteelOrbis.
The reference price for import SAE1006 HRC in Vietnam, based on the most competitive offers, has come to $520-540/mt CFR, compared to $510-520/mt CFR in the middle of the week, but down by $20-30/mt week on week.
