The Vietnamese scrap market made a slow start to the current week, as Japan was out for the Obon holidays in August 13-16. Market players seeing the increases in import scrap prices report that the steel market lacks the strength to support such higher prices. As SteelOrbis reported previously, Hyundai Steel has increased its bids for Japanese scrap, making it harder for the Vietnamese to compete. Also, offers from the US are on the high side, very different from Vietnamese mills’ desired levels for this grade. Meanwhile, the local Japanese scrap market is gaining momentum, reducing the possibility of lower-priced offers to Vietnam in the coming days.
Currently, indicative Japanese H2 scrap offers to Vietnam are at $390-395/mt CFR. However, buyers’ bids are around $370s/mt CFR, which are closer to the Kanto scrap export tender’s winning price last week which translated as $375/mt CFR Vietnam. The level of $370/mt CFR is equal to approximately $310/mt FOB or JPY 41,800/mt FOB, and so is lower than Hyundai Steel’s bids announced today at JPY 42,500/mt ($314/mt) FOB. According to a Vietnamese source, “The latest offer I got from Japan was at $400/mt CFR. It is difficult for Vietnamese mills to increase their scrap procurement prices this fast while the steel market does not provide support. China is also unstable.”
As a result, the reference price for ex-Japan H2 scrap has increased by JPY 3,000/mt ($16/mt) on the lower end due to the higher bids coming from South Korea and by JPY 1,500/mt ($5/mt) on the upper end due to the upward pressure observed both in Vietnam and Taiwan to JPY 42,500-44,500/mt ($315-330/mt) FOB. The dollar-based changes were calculated after taking into consideration the Japanese yen-US dollar exchange rate fluctuation.
Local billet prices in Vietnam are currently in the range of $520-535/mt ex-works, according to sources, who point out that, under the current price conditions, steel mills cannot buy import scrap at higher prices. “This is the reason why Vietnamese mills are seeking import scrap at around $360-370/mt CFR,” a Japanese source commented.
Meanwhile, US suppliers’ offers for ex-US West Coast bulk HMS I/II 80:20 scrap cargoes are at $410-435/mt CFR to Vietnam. This level is not considered acceptable by Vietnamese buyers. “They are too high to even consider,” several sources commented.
Finally, no new ex-Hong Kong offer or booking for HMS I/II 50:50 scrap by bulk to Vietnam has been heard this week. But a deal for the same material has been done from Macau at $360/mt CFR for a small tonnage. This level is similar to the ex-Hong Kong deal closed two weeks ago.
$1 = JPY 135.22