Posted on 16 Jul 2021
Vietnam's June ferrous scrap imports remained high as a bullish steel market before mid-May pushed steelmakers to restock raw material.
Total imports in June slipped by just 0.1pc from May to 707,605t, taking January-June imports up by 32pc on the year to 3.46mn t, Vietnamese customs data show. The January-June imports were equivalent to 55pc of total 2020 imports.
Cargoes that arrived in June were mainly booked before mid-April for US scrap and from mid-April to mid-May for Japan scrap. The Asian steel market was bullish during the period when Chinese domestic billet prices were on an upward trend, surpassing the highest level in 2008. Vietnamese steelmakers made decent profits on their product export sales and so could afford increasing scrap prices, as they were selling large quantities of billet to China.
Imports from July onwards are likely to fall as Vietnamese buyers turn more cautious with domestic steel sales becoming sluggish, coupled with unstable export business. A new wave of Covid-19 cases began in Vietnam from mid-June. Daily new cases have increased to above 2,000 since 11 July, according to Johns Hopkins University data, with no sign of slowing yet. Ho Chi Minh city began a 15-day lockdown from 9 July, which led to a sharp drop in domestic steel demand. Many Vietnamese electric arc furnace mills reduced production levels according to the domestic situation, leading to less scrap demand.
The Vietnamese government is also planning to introduce a 5pc export tax on billet to cool rising domestic steel prices. If the proposal is approved, Vietnamese steelmakers will have to sacrifice some profits on export orders to compete with suppliers from other origins.
US became the top supplier for the first time since September 2019, mainly driven by higher availability of bulk cargoes from the US west coast during the purchasing cycle. Vietnamese buyers turned to US scrap as Japanese scrap supplies were limited and at higher prices.
Imports from all other origins fell from May, and US scrap filled demand with both containerised and bulk scrap. Japanese suppliers have been paying less attention to the export market this year because strong domestic demand is able to absorb a big portion of locally produced scrap.
Source:Argus
