VIETNAM STEEL SCRAP: Lack of vessels create low spot liquidity

A lack of vessels at Japanese ports has resulted in low liquidity for imported ferrous scrap in the key market of Vietnam in the week to March 19, market sources told Fastmarkets.

There was market chatter that Vietnamese mills had bought Japanese H2 cargoes at $425 per tonne cfr southern Vietnam on Thursday, although a trader said this was for Hong Kong-origin H1&H2(50:50) and that the equivalent price for H2 would be $425-430 per tonne cfr Vietnam.

Prices for Japanese H2 cargoes descended further from earlier this week, when offers at $435-440 per tonne cfr Vietnam were met by bids at $430 per tonne cfr Vietnam.

A shortage of vessels at Japanese ports has also resulted in a dearth of spot liquidity this week, sources said.

“Many shippers aren’t able to get vessels to export H2 cargoes so I don’t think any transactions were concluded this week,” a seller in Southeast Asia told Fastmarkets on Friday March 19.

Domestic steel mills also left the import market due to the bearish outlook and in hope prices will fall further before purchasing cargoes again, sources said.

Demand for domestic scrap remained stable this week, a domestic scrap seller told Fastmarkets.

“Steel producers have good margins between domestic scrap and finished steel. For example, there’s a margin of around $190 per tonne between 3mm scrap and rebar,” the scrap seller said on Thursday March 18.

Domestic scrap prices are at 8,800-8,900 dong per kg ($380.56-384.88 per tonne), against rebar prices at 14,800 dong per kg.

“There’s a near 4-million-dong-per-tonne margin that rebar producers are enjoying now, especially with a 200-dong-per-kg increase for rebar prices recently,” he said.

Lower domestic scrap prices are another reason to skip out on the import market, a buyer source in Vietnam said on Friday March 19.

“There’s sufficient supply of domestic scrap so it makes more sense for us to buy from local suppliers for better margins,” the buyer source said.

Offers for bulk Japanese HS were at $470 per tonne cfr Vietnam, down from $480-485 per tonne cfr Vietnam last week, while Hong Kong-origin H1&H2 (50:50) was offered at $430 per tonne cfr Vietnam.

Lower prices in Japan and South Korea have also weighed on market sentiment, sources said.

One major South Korean producer bid for Japanese H2 scrap at ¥41,000 ($376.13) tonne, down by ¥1,500 per tonne from a bid from another major South Korean steel mill last week.

The South Korean producer managed to secure 20,500 tonnes of H2 and 2,000 tonnes of H1&H2(50:50), against a total of 62,000 tonnes of scrap offered.

Fastmarkets’ weekly price assessment of steel scrap H2, Japan-origin import, cfr Vietnam was $425-430 per tonne on Friday, down by $15 per tonne from $440-445 per tonne on March 5.

Bulk HMS 1&2 (80:20) cargoes were on offer at $450-455 per tonne cfr Vietnam earlier in the week.

Market chatter of a bulk deep-sea cargo sold at $445 per tonne cfr Vietnam late last week was heard to be true, with a major yard in the US selling a composite cargo.

Sources said spot prices were around $437-438 per tonne cfr Vietnam for HMS 1&2 (80:20) cargoes given that South Korean market participants purchased two deep-sea cargoes at $431-432 per tonne cfr on a HMS 1 basis.

Fastmarkets’ weekly price assessment for deep-sea bulk cargoes of steel scrap, HMS 1&2 (80:20), cfr Vietnam was $437-438 per tonne on Friday, down by $23-27 per tonne from $460-465 per tonne on February 19.

Transactions were concluded for United States-origin containerized HMS 1&2 (80:20) at $405 per tonne cfr Vietnam earlier in the week, although buyers were bidding below $400 per tonne cfr Vietnam by Friday March 19.

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