Virus to limit Vietnam’s ferrous seaborne trade
Ferrous scrap and finished steel traders expect Vietnam's efforts to contain the coronavirus will reduce its import demand, or at least send prices lower to sustain it.
Vietnam's steel industry is forecasting that domestic steel demand could fall by 35pc and exports fall by 20pc if the outbreak continues.
Vietnam's spot purchases of steel imports are likely to remain slow until the end of March, but buyers could come back in April for May-June shipments, Vietnam-based traders and buyers said. Inventories may bottom out by then if spot purchases remain stalled, or buying could re-emerge if seaborne prices are low enough to attract interest.
Some Vietnam-based hot-rolled coil buyers have asked for shipments to be postponed because they anticipate sales of finished steel products into Europe and US to slow down.
Vietnam steel mills will try to reduce costs. Iron ore and coking coal purchases are mostly in index-linked contracts, limiting their ability to reduce these costs. But mills can target ferrous scrap spot purchases.
Vietnam imported of 4.9mn t of ferrous scrap in 2019. Its largest supplier is Japan, with 45pc market share at 2.2mn t, followed by the US at a 26pc share at 1.3mn t.
Japanese scrap suppliers will have to face the pressure of Vietnamese mills asking for lower prices in the short term. Suppliers will have to compete with one another for sales into Vietnam as the requirement for scrap will shrink if mills are unable to move their products domestically on weak demand. Competition between Japan and the US for market share could pressure prices lower, scrap buyers said.
By Terry Chuay and Xia Ji
source: Argus Media
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