Vietnam's scrap imports rebound in September

Vietnam's September ferrous scrap imports rebounded from August's year-low but remained below the monthly average for 2021 in response to tepid demand amid Covid-19 lockdowns in the country.

Ferrous scrap imports increased by 10.1pc on the month to 406,000t in September, according to Vietnamese customs data. This took January-September imports to 4.94mn t, a year-on-year gain of 14.5pc compared with 18.5pc for January-August imports, Vietnam's customs data show.

The US has been the biggest supplier of ferrous scrap to Vietnam in recent months, with Japanese suppliers prioritising their local market because of higher domestic demand and prices, coupled with less shipping risks for domestic sales. US deep-sea bulk offers, which used to command a $10-15/t premium to Japanese H2 grades, were at similar levels or slightly lower at times, trade sources said. Smaller buyers also preferred containerised scrap from the US because of its more competitive prices.

Vietnam's lockdown measures lasted for three months and were lifted on 1 October. Domestic construction sites and factories were heavily impacted during the lockdowns, resulting in minimal steel consumption. Vietnamese mills kept their production rates low in response to muted downstream demand and turned to the regional export market, where demand was heightened by requirements from China.

Vietnam exported 2.6mn t of semi-finished product in the first eight months of this year, according to GTT data, while total steel production was around 24mn t in 2020. The Vietnamese government estimates steel production will reach 28mn t this year.

Vietnamese buying interest in seaborne scrap grew in September after Chinese billet buyers re-entered the market amid production curbs in China. Vietnam's domestic steel demand might edge up following a restart of construction activity in the country, market participants said.

Looking ahead, the outlook for Vietnam's scrap imports depends on prices of exported billet to China and actual steel demand in the Vietnamese market. Rising scrap prices will lead to narrow profit margins and hence limit Vietnam's scrap appetite, industry sources said.

Vietnam's ferrous scrap imports	t
Country	Sep	% ± vs Aug	% ± vs Sep '20	Jan-Sep	% ± on year
US	161,458	30.1	91.0	1,377,853	108.8
Japan	81,290	-18.2	-72.0	1,798,591	-24.8
Australia	37,707	577.1	NA	392,301	85.6
Hong Kong	36,621	-14.2	-6.4	372,313	14.0
Others	88,725	-8.2	24.6	998,587	37.9
Total	405,801	10.1	-16.4	4,939,645	14.5
Source: Vietnam's customs