Slow steel demand conditions in Vietnam continue but Japanese scrap sellers have once more caught up with their competition in terms of prices. As a result, there is some interest in Japanese scrap imports in Vietnam. A Vietnamese source stated, “Demand for raw materials as well as for steel is very slow, while purchases are few.” As interest rates of global central banks are rising, this is also taking its toll on the local Vietnamese currency. Despite the relatively low inflation rate at 2.54 percent in Vietnam during the first seven months this year and the growth rate of 7.7 percent, new pressure is building on the country’s economy. According to Viet Nam News, Vietnam faces a decision to devalue or maintain the value of its currency, which will also have an impact on trading.
Currently, Vietnamese mills are focusing on Japanese scrap, stating that the most attractive price is coming from Japan. A buyer successfully concluded a deal for Japanese H2 grade scrap at $350/mt CFR, which is $20/mt lower than $370/mt CFR recorded last week. This level is even lower than the bids of Vietnamese buyers voiced last week in the range of $355-360/mt CFR for this grade. Since Japanese scrap prices are now more attractive, a stabilization can be seen in prices, depending on the demand coming from Japan’s traditional export markets. “We should wait and see in the coming two weeks. When the holiday ends, we may see a clearer market in terms of demand,” a Japanese source commented.
The price of $350/mt CFR fixed for ex-Japan H2 in Vietnam translates to JPY 38,760/mt FOB or slightly above, given $60/mt freight from Japan, while last week the highest price level for the export market in Japan was JPY 42,000/mt FOB.
Meanwhile, US suppliers are back with offers to Taiwan, with ex-US West Coast containerized HMS I/II 80:20 scrap offers at $340/mt CFR, no deals at this level or bids from buyers have been heard yet. Ex- US West Coast containerized HMS I/II 80:20 scrap cargoes were offered at $365-370/mt CFR Vietnam on July 20 but then disappeared for a week amid Japanese and ex-Hong Kong competition.
Additionally, no new ex-Hong Kong offer for HMS I/II 50:50 scrap by bulk to Vietnam has been heard yet this week, following the $360/mt CFR recorded last week.
Meanwhile, today Tokyo Bay FAS-based prices for H2 grade have declined by JPY 1,000/mt over the past week to JPY 38,500/mt, equal to JPY 39,500/mt ($296/mt) FOB. The Japanese yen has appreciated from 136.82 to a dollar to 133.68 since SteelOrbis’ report published last week. As a result, the reference price for ex-Japan H2 scrap has declined by JPY 1,800 on the lower end and by JPY 1,500/mt on the upper end to JPY 38,700-39,500/mt ($290-296/mt) FOB, with dollar-based prices maintaining their strength with the help of the appreciating yen.