Posted on 23 Aug 2021
More strict Covid-19 curbs in southern Vietnam are expected to cause steel demand to dwindle even further, Kallanish notes. Residents in Ho Chi Minh City are barred from leaving their homes starting from 23 August for two weeks to counter rising infections.
“The market will worsen because of the stricter social distancing measures,” a Vietnamese trader says. “All companies are requested to close including supermarkets. The military will be responsible for distributing food and water for those in need,” another says. The lockdown imposed in the city will last till 15 September.
Steel mills are located outside the city so they can still operate, a mill manager says. “Only demand is now at bottom as many (construction and building) projects have stopped,” he says. Steel exports are undergoing some delays due to manpower shortages at Vietnamese ports. “We see delays especially for shipments which have to go through Cat Lai port in Ho Chi Minh City,” he says. Congestion at Vietnamese ports has reduced the supply of vessels available for delivery of steel overseas, a trader says.
The shutdown of businesses which started last month has caused local demand to spiral downards. “Nobody can sell anything in the local market,” a Vietnamese trader says. This has left Vietnamese mills turning to the export market in order to trim down burgeoning steel inventories, particularly for billet, rebar and wire rod.
Meanwhile, the Vietnamese hot rolled coil market is stagnant. Many HRC users have stopped making purchases because they are unable to sell their processed steel products in the local market. Russian and Indian SAE 1006 HRC offers remain at $880/t cfr Vietnam and $900-910/t cfr Vietnam.
The Vietnamese users are not even keen on buying local HRC from the two domestic mills. “Buyers forsee that the market trend will be slow next month, so no one dares to buy now,” another trader says. Demand for HRC in Ho Chi Minh City accounts for 60-70% of total Vietnamese demand, trading sources estimate.
Kallanish reduced its SAE 2-2.7mm thickness HRC assessment to $890-900/t cfr Ho Chi Minh City, down $10 on-week.
Source:Kallanish
