Trading in Vietnamese steel market has continued to be on the slow side over the past week. In general, the capacity utilization rates of Vietnamese mills are at around 30-50 percent, a source reported. According to one Vietnamese source, “For a long time, only a few producers bought scrap. Most producers do not show appetite for buying import scrap but, due to their reluctance, their scrap inventories are shrinking. One who wants import scrap has to pay a high price level, but this is not the reality for the whole market.” The domestic scrap volume for higher grade scrap is not enough for Vietnam, and especially for the higher grades Vietnamese producers need to conclude deals for import scrap.
US West Coast HMS I/II 80:20 offers for bulk cargoes are still coming to Vietnam in the range of $410-420/mt CFR, though no bulk deals have been done yet. Market players report that ex-North America containerized HMS I/II 80:20 scrap has been sold to Vietnam at $380/mt CFR this week.
Meanwhile, ex-Japan H2 scrap offers are at $380-390/mt CFR, $5/mt lower as compared to the offer levels recorded last week. Indicative bids from Vietnamese buyers are in the range of $375-378/mt CFR, though a Vietnamese steelmaker concluded a deal for Japanese H2 scrap at $380/mt CFR this week. According to one Vietnamese scrap trader, not all Vietnamese mills can accept such a level.
Also, SteelOrbis has learned that higher grades such as shindachi and HS scrap are sold to Vietnam at $410-415/mt CFR level. Japanese sources report that the deal for HS scrap was done at $410/mt CFR, while shindachi was sold at $405/mt CFR. It is safe to say that Japanese suppliers would like to wait for the Kanto export tender which is due to be held on September 12.
A Japanese source commented, “I believe the winner of the next Kanto tender will be a Bangladeshi buyer. The latest deal for ex-US HMS 80:20 was at $415/mt CFR Bangladesh. Considering the quality gap between HMS 80:20 and Japanese H2 scrap, the Bangladeshi buyer may pay $405-410/mt CFR for H2 and freight is around $45-50/mt, which means $355-365/mt FOB Japan, which is equivalent to JPY 51,000-52,600/mt FAS.”
Today, September 7, Tokyo Bay FAS-based prices for H2 grade scrap are at JPY 48,500-49,500/mt ($329-336/mt). This level signals JPY 49,500-50,500/mt ($336-342/mt) FOB for this grade. Tokyo Bay FAS prices for HS grade scrap are now in the range of JPY 52,000-54,000/mt ($353-366/mt). Prices for shindachi scrap are at JPY 51,000-52,000/mt ($346-353/mt) FAS.
SteelOrbis’ reference price for ex-Japan H2 scrap is now at JPY 49,500-50,200/mt ($336-340/mt) FOB. The lower end is represented by the current Tokyo Bay FOB prices, while the upper end is represented by the bids shared by Vietnamese buyers.
$1 = JPY 147.46