Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Vietnamese steelmaker Hoa Phat steel has received a contract for exports of 120,000mt steel billets to China. The value of the contract is around VND1,000bn ($43mn). Chinese leading trader, Hangzhou CIEC Group has awarded this contract, according to the company’s statement available with Davis Index.

 

This export order would mark the highest ever volume in a single contract for Hoa Phat. The mill’s construction steel manufacturing facility, Hoa Phat Hung Yen Steel would deliver this export order in various batches between July to end August 2020. 

 

Trade partners in China are known to import square billets manufactured at Hoa Phat Dung Quat iron and steel integrated complex in Vietnam. These billets are consumed by Chinese steel rolling factories.  

 

Rising Vietnamese steel exports 

Vietnamese mills have increasingly turned towards exports of steel in 2020 compared to a year ago. Rising demand for billets in China and Southeast Asian markets like the Philippines, Thailand and Malaysia has encouraged Vietnamese steelmakers to offer more material in the market. 

 In Jan-April 2020, Hoa Phat exported nearly 500,000mt of billets to China and ASEAN countries. In the year 2019, the mill exported 195,000mt of billets, only a part of the exports in the first four months of 2020. 

   

China emerged as the leading importer of billets in an open arbitrage window. Demand in China had begun to recover while the world struggled to control the COVID-19 pandemic. Chinese steelmakers booked large quantities of billets as prices declined on the back of the disease. China imported 200,000mt of billets from Vietnam, accounting for 43pc of the latter’s Jan-April exports. The Chinese government’s policy to boost public investment and stimulate economic growth to tide over the impact of the pandemic pushed mills to book billets.  

 

Hangzhou is a large state-owned steel enterprise in China. In 2019, the company bought over 100,000mt billets. In Jan-April 2020, the steelmaker has imported around 60,000mt of billets fro Vietnam. 

 

Chinese domestic billet prices up 

Following a successive rise in iron ore import prices and strengthening futures prices, Chinese billets traded at CNY3,310-3,320/mt ex Tangshan, including VAT on Tuesday, up by CNY20-30/mt from the prior Friday. Chinese billet import offers were at $395-400/mt cfr China, up by $10-15/mt from the prior week for urgent delivery. On the other hand, billet import prices remained almost flat at $385-390/mt cfr Southeast Asia, according to traders. 

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