The Vietnamese hot rolled coil (HRC) market is experiencing a significant downturn, primarily driven by weak demand and softening in the Chinese steel market. Prices for China-origin HRC in Vietnam have been under pressure, with aggressive suppliers willing to lower prices to secure deals.
Last week, offers for Chinese SAE 1006 2-2.5mm thickness HRC dropped to $525-530/tonne cfr Vietnam, a $10 decrease from the previous week. The market situation is described as "very bad" by a southern Vietnam galvanizer, who believes material could be secured at $525/t cfr.
A notable transaction occurred on July 4, when a leading southern Vietnam reroller purchased 10,000 tonnes of 2-2.5mm thickness SAE 1006 HRC from China at $525/t cfr for end-August shipment. The same reroller subsequently reduced its bid price to $520/t cfr for an additional 20,000 tonnes.
The Kallanish assessment for SAE grade 2-2.7mm thickness HRC dropped by $15/t week-on-week, settling at $520-525/t cfr Vietnam. This price decline reflects the overall market weakness.
Several factors contribute to the market's sluggishness; decreased export orders for Vietnamese rerollers, low demand in the EU and US markets, seasonally weak domestic demand, and anticipated dampening of construction activities in August, typically known as "ghost month"
While Chinese mills are attempting to lift prices in response to an improved Shanghai Futures Exchange, the market remains challenging. Some mills are now offering only 10,000t cargoes of Q235 grade HRC at around $524/t cfr Vietnam.
Interestingly, even Japanese and South Korean suppliers are now targeting the Vietnamese market with "attractive" offers for 2mm base thickness SAE 1006 HRC at $520-525/t fob or approximately $545-555/t cfr Vietnam.
The current market conditions highlight the interconnectedness of regional steel markets and the impact of Chinese market trends on neighboring countries like Vietnam. As the situation continues to evolve, market participants will be closely monitoring demand signals and price movements in both domestic and international markets.
