VIETNAM STEEL SCRAP: Buyers shun imports on narrow scrap-billet spreads

Spot prices in the key Vietnamese scrap import market rebounded strongly during the week to Friday February 26, even though buyers with inventories were not actively purchasing due to high prices and the narrow scrap-billet spread, according to market sources.

Japanese H2 was offered at $440-445 per tonne cfr Vietnam in the early part of the week, up $20 per tonne week on week. But offers increased to $455-460 per tonne cfr Vietnam by Thursday, with bids at $440 per tonne cfr Vietnam, and to $460-465 per tonne cfr Vietnam by Friday.
Buyers were not interested in purchasing H2 cargoes at these prices, preferring instead to purchase domestic scrap.
“Purchasing domestic scrap will allow billet producers to make profits, so no buyer is likely to look for imported cargoes now,” a buyer source in Vietnam told Fastmarkets.
Vietnamese billet producers have hiked their offers for export cargoes to more than $580 per tonne fob, especially with buying interest from major steelmaker China, targeting sales prices of $590-600 per tonne cfr China.
“Given the current scrap-billet spread, prices at $450-460 per tonne cfr Vietnam for bulk materials such as H2 is reasonable. Only time will tell whether prices will go up to $470-480 per tonne cfr Vietnam,” a seller source in Southeast Asia said.
This was especially so with bulk Southeast Asia-origin HMS 1&2 (80:20) sold to Indonesia via barges at $460 per tonne cfr, the seller said.
China has been seeking imported billet this week due to the narrow spread between ferrous scrap and billet, as well as upcoming industrial production restrictions in key steelmaking region Tangshan.
Sentiment was supported by major Japanese mini-mill Tokyo Steel adjusting its scrap purchase prices three times this week, including the most recent increase of ¥500-1,000 ($3.86-7.73) per tonne at all its steelworks from Saturday February 27.
It is now paying ¥42,500 per tonne at its Tahara and Okayama works and ¥42,000 per tonne at its Kyushu works. It is also paying ¥43,000 per tonne at its Utsunomiya works and ¥41,500 per tonne at its Takamatsu works.
A mixed cargo of Japanese Shindachi Bara and HS scrap was sold at $485 per tonne cfr Vietnam, against offers at $490 per tonne cfr Vietnam.
Hong Kong-origin H1&H2 (50:50) was offered at $435 per tonne cfr Vietnam earlier this week, up by $30-35 per tonne week on week.
Fastmarkets’ weekly price assessment of steel scrap H2, Japan-origin import, cfr Vietnam was $450-460 per tonne on Friday, up by $29-35 per tonne from $421-425 per tonne on February 19.
Bulk United States-origin HMS 1&2 (80:20) cargoes were offered at $460 per tonne cfr Vietnam, with bids at $450 per tonne cfr Vietnam.
Market sources estimated that prices for deep-sea bulk cargoes would likely be at $450-455 per tonne cfr Vietnam, especially after a major South Korean steelmaker purchased a bulk H1 cargo at $443.50 per tonne cfr South Korea this week.
“While offers were at $460 per tonne cfr Vietnam in the first half of the week, they could have been withdrawn in the second half of the week,” a trader in Vietnam told Fastmarkets on Friday.
There was no spot activity heard in the latter half of the week.
Fastmarkets’ weekly price assessment for deep-sea bulk cargoes of steel scrap, HMS 1&2 (80:20), cfr Vietnam was $450-455 per tonne on Friday, up by $5-10 per tonne from $440-450 per tonne on February 19.
A containerized cargo of 1,000 tonnes of HMS 1&2 (80:20) from the US was sold at $417 per tonne cfr Vietnam this week.

Paul Lim

paul.lim@fastmarkets.com

Published

Paul Lim

February 26, 2021

11:26 GMT

Singapore