Vietnam: Buyers' preference for domestic HRCs weighs on imported offers
Vietnam: Buyers’ preference for domestic HRCs weighs on imported offers...
The Vietnamese imported HRC market continued to see a downtrend after the Chinese mills resumed offers last week. Also, buyers are considering domestically produced HRCs over imported ones on logistical issues and concerns around the expected export tax announcement by the Chinese government.
Current week's offers:
1. Chinese HRC offers are heard at around $760-765/tonne (t) CFR for Apr'22 shipments.Baosteel has released its monthly flat steel product price list for Dec'21 bookings. The list price of HRCs fell by RMB 300/t ($47/t), while heavy plate prices dropped by RMB 200/t ($31/t). CRC and hot-dipped galvanised steel prices have been reduced by up to RMB 300/t ($47/t).
2. Indian mills continued to hold-back offers. However, trade participants expect a drop in offers in the near term, given the global price corrections.
3. Offers from Russian mills have not been received this week. Last offers were at around $880/t CFR.
4. Japanese and South Korean mills are not offering for quite some time as they are catering to the rising domestic demand.
Factors impacting the imported HRC demand in Vietnam:
a. Domestic mill reduces prices:Among the two major domestic players, Formosa has already announced a reduction of $40-45/t in HRCs offers for Jan'22 shipment HRCs. Revised offers for skin passe stand at $885/t CIF basis. Price revision by Hoa Phat is expected to be announced in a few days.
b. Buyers prefer domestic HRCs: Buyers are highly preferring domestically produced HRCs over price gap and delivery time lag they may face while booking imported material. For instance, booking material for Jan'22 shipment shall make the cargo available at port in Feb'22 which can be further impacted by the availability of containers/vessels, and the voyage time.
Furthermore, demand in Vietnam is yet to recover fully, with the markets opening up gradually while the country is still combating rising Covid-19 cases.
c. Chinese export tax announcement still unclear:It is still unclear as to when the Chinese government will impose the export tax.Meanwhile, most of the Chinese mills have included a clause of 'buyers to shoulder any losses arising out of the export tax imposition', which is affecting demand of Chinese- origin HRCs in Vietnam. It is to be noted that the concern over the export tax is lingering since first heard in mid-May'21.