VIETNAM STEEL SCRAP: Strong demand by billet producers stokes price increases

Vietnamese scrap buyers have continued sourcing import cargoes amid supply tightness and stable demand in the week to Friday November 27, market sources told Fastmarkets.

Japanese H2 cargoes were offered at $350-355 per tonne cfr Vietnam in the earlier part of the week, with a transaction heard concluded at $345 per tonne cfr Vietnam for 8,000 tonnes to south Vietnam.
Bids later increased to as high as $350 per tonne cfr Vietnam, against offers at $355 per tonne cfr Vietnam.
"The demand is mainly from induction furnace-based and blast furnace-based steel mills in Vietnam. Electric-arc furnace-based steel mills are unlikely to purchase at these levels because they would be running losses," a buyer in Vietnam told Fastmarkets on Friday.
Vietnamese IF-based billets have been sold to the Philippines this week at $490 per tonne cfr, indicating a spread of $135-145 per tonne against H2 scrap. This is an extremely comfortable margin for Vietnamese billet producers.
High-grade Japanese HS was offered at $385-390 per tonne cfr Vietnam. 
Japanese exporters have hiked offers continually this week, with a large range of fob Japan offers in the spot market. Sellers and traders of Japanese scrap have opted to withhold offers in light of the bullish sentiment, expecting prices to go up further before they consider selling their materials.
Prices have also been bolstered by news of major domestic mini-mill Tokyo Steel increasing its scrap purchase prices again. It has increased scrap purchase prices eight times this month.
It is now paying ¥28,500 ($273) per tonne at Utsunomiya steel works, while maintaining purchase prices at its Tahara, Okayama, Kyushu and Takamatsu steel works.
Hong Kong-origin H1&H2 (50:50) was heard sold at $345 per tonne cfr Vietnam this week.
Fastmarkets’ weekly price assessment for steel scrap H2, Japan-origin import, cfr Vietnam was $345-355 per tonne on Friday, up $10 per tonne from $335-345 per tonne cfr Vietnam in the previous week.
A deep-sea cargo from the United States West Coast was heard sold to Vietnam at $365 per tonne cfr, with initial offers at $370 per tonne cfr Vietnam. Market sources said the buyer was a large blast furnace-based steel mill in north Vietnam, although this could not be verified directly.
The same buyer was heard to be bidding for bulk plate & structural scrap at $370 per tonne cfr Vietnam.
A bulk HMS 1&2 (80:20) cargo from the United Arab Emirates was offered at $356 per tonne cfr Vietnam. However, this was not included in the price assessment because the origin does not fit Fastmarkets' pricing specification.
Sources said there could potentially be more upside to spot prices given the tight supply situation for both Japanese and American scrap.
Scrapyards in the US have either withheld cargoes on expectation of further prices increases or have not been offering spot cargoes due to the major Thanksgiving holiday (November 26).
"There is a strong sense among market participants that domestic prices in the US will settle much higher in December, causing scrapyards to abstain from entering the export markets," a trader in East Asia told Fastmarkets on Wednesday.
Fastmarkets’ weekly price assessment for deep-sea bulk cargoes of steel scrap, HMS 1&2 (80:20), cfr Vietnam was $365 per tonne on Friday, increasing by $10-16 per tonne from $349-355 per tonne a week earlier. 

Paul Lim

paul.lim@fastmarkets.com

Published

Paul Lim

November 27, 2020

10:06 GMT

Singapore