Posted on 15 Jun 2022
Vietnamese mill Formosa Ha Tinh’s massive domestic price cut for its new hot rolled coil allocations reflects the poor state of the market, Kallanish notes.
The leading strip producer lowered the price of its new allocations for non-skin passed SAE 1006 by $100/tonne to around $755/t cfr Ho Chi Minh City (HCMC) from its announced prices last month. “The market price is at this level. “And we need orders,” a source close to the company said on Tuesday. The mill is also pegging its SS400 grade HRC at $755/t cfr HCMC.
Vietnamese market participants were anticipating last week that the mill would lower its prices to $770-780/t cfr. Back then, the mill was giving offers privately to certain customers at $800/t.
Formosa’s “price is not bad but demand is terrible,” a Vietnamese trader says. He thinks Vietnamese buyers will not take up all the available allocations. Offer prices for Indian SAE 1006 HRC are currently at $745/t cfr and for Chinese $755/t cfr, though he thinks Chinese material can be negotiated down to $745/t cfr.
The market remains under pressure. Discounting could take place on a case-by-case basis for willing sellers. There is market talk that the other Vietnamese strip producer would lower its monthly HRC domestic prices to $735-740/t cfr.
Regional traders are uncertain whether the price cut is sufficient to generate much buying. “I think, it will not be easy, but easier than last month,” one trader says. Another expects the mill will cut its prices to $735-740/t. “But I'm not sure if at this level they can sell much quantity,” he says. Buyers are targeting much lower, at $720-730/t cfr, he adds.
Formosa also simultaneously announced it will reduce its monthly wire rod prices by $70/t to $810/t cfr.
Source:Kallanish
