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Vietnamese HRC market recovers amid China rebate rumours

Posted on 08 February 2021

The import market for re-rolling hot rolled coil in Vietnam was quiet last week, Kallanish understands. Importers delayed making purchases because of the approaching Tet (Lunar New Year) holiday.

“There is no time to issue LCs; most companies in Vietnam will be closing early next week,” a local trader said on Friday.

The market has bottomed out amid rumours that the Chinese export tax rebate on HRC will be reduced from 13% to 9% effective April. Suppliers have stopped lowering Chinese HRC prices. In fact, some Chinese mills raised offer prices to factor in the possible rebate loss.

A certain Chinese mill raised its offer price for 2-2.5mm thickness SAE 1006 HRC for April shipment by $15/tonne to $670/t cfr Vietnam last week. This price applies to contracts incorporating a clause of an equal sharing between buyer and seller of any effective tax rebate reduction. The mill’s offer price for contracts which exclude this clause is $685/t cfr.

Buyers need to choose whether to sign a HRC contract at $670/t or $685/t. “There is no refund of the $15/t if there is no rebate cut,” a trader says. No deals have transpired because of the holiday. A booking for 10,000 tonnes of SAE 1006 HRC from the same mill concluded at $652/t cfr Vietnam at end-January.

Offers for position cargoes for Chinese SAE 1006 HRC for March shipment were prevailing at $670/t cfr Vietnam on 4 February, and appeared to have dried up the following day. These offers were previously priced at $640-650/t cfr Vietnam.

Offers from the Tier 1 Asian mills are still much higher-priced. A Chinese Tier 1 mill is offering 2mm thickness base SAE 1006 HRC at $720/t cfr and a popular Chinese mill at $710/t cfr for 2-2.5mm coil. Offers for Japanese and South Korean SAE 1006 2mm HRC are tagged at $760-770/t cfr.

Last week, Vietnamese buyers were focused on purchasing SS400 HRC from domestic producer Hoa Phat. The company's offered price of $660/t cfr for March/April shipments is "…cheaper than Chinese mills," a trader says.

Kallanish assessed the import price for SAE 2-2.7mm thickness HRC on 5 February at $660-670/t cfr Ho Chi Minh City, up $10 week-on-week.

Source : Kallanish