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Vietnam rerollers warn of steel supply glut

Mar 02, 2018 | 11:42 AM | Singapore | Paul Lim

Tags  Vietnam steel, Section 232, steel rerollers, flat-rolled steel, hot-dipped galvanized coil, metallic-coated coil, cold-rolled coil, hot-rolled coil Paul Lim

Vietnamese rerollers are fretting over a 25% import tariff that the United States is set to impose on steel imports, expecting them to reduce the volume of finished flat products that they can ship to the country, market sources told Metal Bulletin on Friday March 2.

This could in turn result in a supply glut of flat steel in Asia, they warned.

“Vietnamese rerollers are growing increasingly worried and thinking about what to do once the 25% tariff is imposed because this could mean the loss of a major market for them,” one Vietnamese reroller source said.

The top three steel exports from Vietnam to the US are cold-rolled coil, hot-dipped galvanized coil and other metallic-coated coil, according to data from the US Commerce Department's Enforcement and Compliance division.

Export volumes have grown continually in the past five years, increasing particularly strongly between 2015 and 2017.

CRC exports increased to 155,619 tonnes in 2017 from 33,199 tonnes in 2015, while HDG shipments rose to 124,799 tonnes last year from 292 tonnes in 2014.

Other metallic-coated flat steel exports increased to 130,440 tonnes in 2017 from 181 tonnes in 2013.

US President Donald Trump said on Thursday that the US would impose an import tariff of 25% on steel imports and that it would "remain for a long time" to protect its domestic steel industry from cheap steel from around the world.

The move follows recommendations made by Commerce to impose tariffs of 24-53% on steel imports following a Section 232 probe into whether steel imports posed a national security risk to the US.

Asia is expected to face a renewed glut of flat steel if US demand truly drops off, especially if Vietnamese demand for Asia-origin substrate falls.

“Once Vietnam reduces its spot demand for HRC, there will be surplus HRC that needs to find sales outlets elsewhere in Asia,” an industry source with close knowledge of the rerolling market said.

“This would mean more Chinese, South Korean and Japanese HRC being offered by mills and traders, which would exert pressure on prices,” he said.

But this is also a boon for rerollers because premiums for high-quality HRC from Japan and South Korea over lower-quality grades would drop in response to an increase in spot supply.

Japan and South Korea-origin SAE1006 HRC typically commands premiums of about $30-50 per tonne over Chinese and Indian product. Buyers are sometimes willing to pay extra if they wish to purchase higher-quality material.

Market sources in Japan and South Korea have also raised concerns about how the new US tariffs would affect steel exports from those countries.


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