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Credit squeeze dampens bar/rod demand in Vietnam
Tuesday, 12 July 2011
Si Cu Thep
Sales of construction long products in Vietnam in June amounted to 298,000 tonnes, a fall of 23.5% from the previous month and also down 16.1% year-on-year, according to the Vietnam Steel Association(VSA)”Production of longs in June at 347,000 t was down by 20.8% m-o-m but up by 9.9% y-o-y”
Tighter monetary and fiscal policies being undertaken by Hanoi to rein in inflation are the main reasons for the fall in June’s steel figures, VSA vice-chairman and general-secretary Dinh Huy Tam tells Steel Business Briefing. "These policies are affecting steel demand more so than the current rainy season", he says
Sales of longs during the first six months of this year reached 2.42m t, up nearly 12% compared with January-June 2010. Production rose to 2.58m t, an increase of 14.8% over the corresponding period last year”
Tam describes these cumulative figures as “not too bad," but cautions that the situation this year is "tougher than the Asian financial crises”. He explains that ongoing measures such as high bank interest rates exceeding 20% per annum, difficulties faced by enterprises in obtaining loans, and a slowdown in investment spending have had a negative impact on steel consumption. GDP growth for 2011 is expected. to dip below the target of 7-7.5% set by the Vietnamese authorities at the beginning of this year", he adds.
The VSA tracks data from its member steel mills that together contribute around 85% of Vietnam's long steel production” 
Hot rolled coil prices decline further in Korea
Continuing soft domestic demand has led spot prices of hot rolled coil in Korea to weaken further this week”
Retail prices of 3mm SS400 commodity grade HRC sourced from domestic mills were pegged at KRW890,000-910,000/tonne ($833-852/t) on Monday, down KRW 10,000-20,000/t ($9-18/t) from a week earlier” Some materials were being offered for as low as KRW 860,000-870,000/t”
Weak buying interest from end-users including pipe makers has led local dealers to reduce their offer prices. But high HRC inventory levels at customers' yards – and market sloth ahead of Korea’s approaching summer holidays – are unlikely to help boost their sales at present, Steel Business Briefing notes”
Spot prices for China-origin commodity grade HRC have declined too, by KRW20-30,000/t to KRW 800 - 820,000/t ($749-768/t) this week”
Another reason behind the soft HRC prices could be Hyundai Steel, which has ramped up HRC output using feeds from its two new 4m t/y blast furnaces, an industry source charges. Hyundai sold some 950,000 tonnes of HRC during May-June in Korea’s home market while Posco supplied only 719,000 t during the same period", it adds.
“The HRC market is dull for the moment," a source in Seoul admits to SBB. "Many buyers have adopted wait-and-see attitude as most have high stock levels." He adds that at the earliest HRC buyers may start replenishing their inventories from next month” 
Nippon Steel deepens H-beam production cut
In a tacit admission that its production cuts have been insufficient to reduce stocks, Nippon Steel has decided to halt production on section mills at its Kimitsu works near Tokyo and its Sakai works in Osaka beyond their scheduled maintenance stoppages.
The steelmaker had earlier decided to bring forward 2-3 week stoppages for regular maintenance at its works to the July-September quarter from the initially planned October-December period, as Steel Business Briefing reported. But after it learned that H-beam stocks at end-June had again increased month-on-month, it decided to schedule an additional week of stoppages at both mills from late July”
“Stopping the mills is a direct way to decrease stocks,” a Nippon Steel spokesman noted. He was talking Tuesday after Nippon Steel announced that H-beam stocks held by its ‘Tokiwakai’ grouping of stockists at end-June had increased by 4.7% or 9,600 tonnes from end-May to 215,400 t. This took the stock ratio to 2.73 months or well above the 2-month level Nippon Steel considers “adequate”
Sections demand from small-scale construction projects is increasing but this small demand does not help to lift total delivery volumes, it admits. Regarding pricing, Nippon Steel says cutting stocks and improving market conditions are its priority so will hold H-beam prices for July contracts (unchanged from April).
Nippon Steel does not reveal its prices, but SBB believes its senior-sized beams are at around ¥100,000/t($1,250/t). This is way above prevailing Tokyo market levels of ¥78,000-80,000/t and those by rival Tokyo Steel Manufacturing at ¥76,000/t. “Nippon Steel’s high price is just like asking distributors to not buy,” Tokyo-based distributor remarked.
Source: SBB
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