VIETNAM STEEL SCRAP: Lower volumes from Japan stabilize prices

Prices for cargoes of steel scrap imported to Vietnam held largely stable in the week to Friday October 2 following a reduction in volumes offered by Japan.

Participants in Taiwan and South Korea have been away from the market for much of the week due to their Mid-Autumn Festival holidays, leaving only Vietnam among major purchasers of Japan scrap, but no new deals were heard closed this week.

Offer prices for bulk cargoes of Japan-origin H2 scrap to Vietnam continued their downward movement at the beginning of the week, with some prices dipping to below $295 per tonne cfr South Vietnam, but the drop stopped by the end of the week. Bids were heard as high as $295 per tonne cfr.

Fastmarkets’ weekly price assessment of steel scrap H2, Japan-origin import, cfr Vietnam was $295 per tonne on Friday, narrowing up $2 from $293-295 per tonne a week earlier.

“On Monday and Tuesday, prices trended downward but by Friday, the market changed and there are now fewer offers in the market,” a Vietnamese trader said.

“Offers to Vietnam should be over $295 per tonne cfr for H2, but lower than $305 – I personally do not want to sell to Vietnam at $290-295 per tonne cfr for H2,” a Japanese supplier said.

A Japanese trader also told Fastmarkets earlier this week that low scrap supply in the country was weighing on the volumes of material available for export.

“In reality, we cannot buy H2 at ¥27,500 [$260] per tonne fob from our suppliers, they want a minimum price of ¥28,000 per tonne fob,” a second Japanese trader said, adding that ¥28,000 per tonne fob would be equal to $297 per tonne cfr Vietnam.

A third Japanese trader offered H2 at $304 per tonne cfr South Vietnam and received a bid back at $295 per tonne cfr.

On the other hand, buyer demand has been limited by sluggish Vietnamese steel markets.

“I don’t see good demand for steel right now, so no recovery in scrap prices is possible,” a Vietnamese mill source said.

Another factor that stabilized Vietnam scrap markets was the recent purchase of a United States West Coast-origin bulk scrap cargo by a mill in South Korea at $306 per tonne cfr for HMS 1. The price far exceeded the expectations of the South Korea market, with participants telling Fastmarkets last week that they would expect deep sea HMS 1&2 (80:20) sold to South Korea to be closed at $290-295 per tonne cfr.

Offers for deep-sea cargoes of HMS 1&2 (80:20) from the US West Coast were heard at $310 per tonne cfr Vietnam on Friday, with Vietnamese mills bidding at $305 per tonne cfr.

Fastmarkets’ weekly price assessment for deep-sea bulk cargoes of steel scrap, HMS 1&2 (80:20), cfr Vietnam was $305-310 per tonne on Friday, unchanged week on week.

With Asian steel scrap markets now seemingly in a holding pattern following price declines over the previous fortnight, thoughts of many market participants centered on the likely behavior of Chinese mills once they return to work after the Mid-Autumn Festival holidays on October 9.

“In Japan, the market is divided and some people are seeking the market to weaken, but the situation could change again after China enters the market,” the Japanese supplier said.

The Vietnamese trader said that China’s activity following its return from the holiday period would be crucial for the future direction of prices.

China is a key buyer of Vietnamese steel, and its lack of fresh import business for material such as steel billet has weighed on Vietnam steel prices and Southeast Asia steel billet prices in recent weeks.

China purchased more than half of Vietnam’s bumper 882,019 tonnes of steel exports in June 2020, according to data from Vietnam’s customs.

(This article was updated to amend an erroneous bid price in the third paragraph.)

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