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

Vietnamese steelmaker Hoa Phat’s order book for hot-rolled coil (HRC) products exceeds 180,000mt outpacing its production capacity. The current orders in hand are deliverable until January 2021, according to a company release.


Hoa Phat group can supply 90,000mt as it has to reserve a part for in-house consumption. Strong order book indicates market demand exceeds the group’s production capacity by 200pc. 



Steel inventories at many factories consuming hot-rolled coil steel are very low. Demand for construction materials such as galvanized steel, steel pipe and structural steel is likely to be higher through Nov-Dec as the rainy season ends and traditionally consumption turns bullish ahead of Tết (Lunar New Year) holidays.


Vietnam has signed many free trade agreements (FTAs) to explore export opportunities for galvanized steel, cold-rolled steel, and steel pipe. Many domestic steelmakers have thus increased their HRC orders from Hoa Phat Group. Currently, domestic HRC producers meet 60pc of the local demand. 


The country’s annual HRC demand is estimated at 8mn mt with Formosa Ha Tinh, supplying the highest, upto 5mn mt and Hoa Phat Group supplying 3mn mt. The company has been actively expanding its Dung Quat project with a focus on HRC products.


Supply shortage

Demand for HRC both in Vietnam and the global market has been on the rise. Robust demand, especially in China, has put pressure on the supply side. 


In China, the government has announced a stricter winter production cut this year to manage pollution levels. Despite strong demand, many mills had to reduce their HRC and other steel products output. Also, the successive depreciation of the US dollar against the Chinese yuan prompted Chinese steelmakers to focus on domestic sales rather than exports. 


Asian markets like India, Pakistan and Thailand recorded a sharp recovery in the domestic auto steel demand which is driving HRC sales. Prices for HRC products jumped over $30-40/mt for December and January shipments. Prices rose by $20/mt from early October to $550-570/mt cfr, with a potential to increase by another $20/mt, as per Vietnam Steel Association (VSA).

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