VIETNAM STEEL SCRAP: Spot demand dips on souring sentiment

Spot demand for imported ferrous scrap in key Asian market Vietnam slowed in the week to Friday June 19 after buyers noted a dip in prices from the middle of the week.

Offers for bulk Japanese H2 cargoes were at $275-280 per tonne cfr southern Vietnam at the start of the week and had fallen to $270 per tonne cfr southern Vietnam on Friday.
There was a transaction at $270 per tonne cfr Vietnam in the earlier part of the week before demand thinned while buyers awaited more price falls. There were limited bids at $264-265 per tonne cfr southern Vietnam by Friday June 19.
A Japanese bulk H1&H2 (50:50) cargo was heard sold at $269 per tonne cfr southern Vietnam.
“It’s high time prices start to fall because a lot of demand from steel mills has been fulfilled in recent weeks,” a ferrous scrap trader in Singapore said on Thursday.
Steel mills in Vietnam are opting to either purchase steel billet for rerolling from domestic producers or stay away from purchasing imported scrap all together.
“How can a mill buy ferrous scrap at $275-280 per tonne cfr Vietnam when billet prices are at about $400 per tonne cfr Southeast Asia,” a Vietnamese trader said on Friday.
The trader was referring to the narrow raw material-end product spread of $120-125 per tonne cfr Southeast Asia, which is currently at the low end of the $120-160 per tonne spread typically seen in the Southeast Asian markets, according to Fastmarkets data.
Domestic billet is being offered at similar levels, with Formosa Ha Tinh Steel Corp offering SD295 billet at $397 per tonne cif northern Vietnam and SD390 billet at $405 per tonne cif northern Vietnam.
A domestic Vietnamese scrapyard source said local prices were moving in opposite directions.
“Ferrous scrap prices have increased by about $10-15 per tonne in the past two weeks, but rebar prices have fallen by the same amount,” he said.
Domestic ferrous scrap is being sold at 6,200-6,400 Vietnamese Dong per kg ($265.61-274.18 per tonne), while induction furnace mills seeking higher-quality material will have to buy at 6,500-6,600 Vietnamese Dong per kg.
Japanese sellers expect offers for fob Tokyo cargoes to dip in the near term, especially with major Japanese mini-mill Tokyo Steel increasing its bid prices until near export levels.
“This shows that it is unlikely for fob Japan prices to increase now,” a Japanese trader told Fastmarkets on Thursday June 18.
There was interest for high-grade Japanese HS scrap at $290 per tonne cfr Vietnam, compared with offers at $295 per tonne cfr Vietnam in the earlier part of the week. But spot prices fell later in the week and there was a transaction at $287 per tonne cfr northern Vietnam for 8,000 tonnes of Japanese HS scrap.
Fastmarkets’ weekly price assessment for steel scrap H2, Japan-origin import was $264-270 per tonne cfr Vietnam on Friday, down by $8-11 per tonne from $275-278 per tonne cfr a week earlier.
There was market talk that a bulk 30,000-tonne cargo of HMS 1&2 (80:20) from the United States West Coast was sold at $275 per tonne cfr southern Vietnam this week, against offers at $280 per tonne cfr Vietnam.
“This is a reasonable price given that Japanese H2 is offered at $270 per tonne cfr Vietnam,” a buyer source in Vietnam said on Friday June 19.
Fastmarkets’ weekly price assessment for deep-sea bulk cargoes of steel scrap, HMS 1&2 (80:20), cfr Vietnam was $275 per tonne on Friday, narrowing downwards by $5 per tonne from $275-280 per tonne cfr Vietnam a week earlier.
In the containerized markets, there were bids at $250 per tonne cfr southern Vietnam for US-origin HMS 1&2 (80:20), while offers were at $260 per tonne cfr southern Vietnam.
“Containerized ferrous scrap buyers are willing to wait and see because they feel that prices will fall soon,” the first Vietnamese trader said.

Paul Lim

paul.lim@fastmarkets.com

Published

Paul Lim

June 19, 2020

11:06 GMT

Singapore