Posted on 02 Mar 2022
Vietnam's ferrous scrap imports fell to their lowest level in five years in January, as electric arc furnace (EAF) steel mills focused on domestic purchases with thin steel production margins.
Imports of ferrous scrap in January slumped by 69.2pc from the previous month and 57.2pc against a year earlier to 177,000t, the lowest since February 2016, Vietnamese customs data show.
Vietnamese buyers were on the market sidelines with little interest in imported scrap at the end of 2021 because domestic and export businesses were both stagnant, while market participants expected demand to recover only in February after the lunar new year holiday. Most EAF mills cut production by half in December to keep domestic steel sales profitable. Domestic scrap supplies, which were cheaper than imported and with a shorter lead time, were more favourable to Vietnamese buyers.
Japan was the top supplier to Vietnam for most of last year but dropped to the third place in January this year. The cargoes that cleared customs in January were booked in early November to mid-December. The Argus H2 fob Japan assessment fell by ¥5,500/t ($48/t) to ¥47,500/t fob during this period. Japanese suppliers were focused on domestic sales with prices firmer than in the seaborne market. Domestic Japan prices dropped by around ¥2,000/t to ¥53,000/t on a delivered to mill basis.
Imports from other origins, expect New Zealand, also fell significantly. Slower billet export business, with a narrow scrap-billet margin, pushed away Vietnamese scrap buyers. Tangshan billet prices hit the year's low point in mid-November and hovered at this level until the end of 2021, making it difficult for Vietnamese mills to export to China or other regional buyers.
Imports in the coming months are likely to rebound, with Vietnamese buyers active since the end of January because of a bullish outlook. The Vietnam Steel Association cited the disbursement of capital for public investment and infrastructure projects as factors that will support steel demand after this year's first quarter.
Source:Argus Media
