----Interview with Nguyen Hoang Phong
Sales Director
Saigon Steel Service And Processing Co., Ltd. (SGC)
Located at No. 5, Road 4A, Bien Hoa 2 Industrial Park, Long Binh Tan Ward, Bien Hoa City, Dong Nai Province, Vietnam, Saigon Steel Service And Processing Co., Ltd. (SGC) specializes in steel forging, stamping and roll-forming. Saigon Steel Service And Processing Co., Ltd. (SGC) imports steel from SMI, NSC, Nisshin Steel, Kobe Steel, Tokyo Steel, CSC, and so on. Besides, the company supplies processing service according to customers' requirements.
Asian Metal: Hello, Mr. Nguyen. Thanks a lot for agreeing to the interview. Please could you briefly introduce your business?
Mr. Nguyen: Established in December 1996, Saigon Steel Service And Processing Co., Ltd. (SGC) acts as a joint venture company between Vietnam Steel Corporation in Vietnam and Sumitomo Corporation in Japan. SGC stays among one of the first-tire coil centers in Vietnam. The yearly trading and processing volume stands at around 120,000t.
Asian Metal: Do you rely on imported materials? Where do you import from?
Mr. Nguyen: Absolutely. We import raw materials from Japan, China mainland and Taiwan. Besides, we also consume raw materials made by local steel producers. The import and domestic accounts for 50% each.
Asian Metal: How about the steel production in Vietnam this year? Does the market witness obvious change compared with 2021?
Mr. Nguyen: Dragged by the price increase of raw materials such as iron ore and coke, local steel mills slowed down production this year. From January to September, the steel output reached 20.81 million tons, down by 5.8% YoY. Meanwhile, the demand shrank. The consumption of steel decreased by 1.6% YoY to 19.26 million tons or so in the first three quarters of 2022. For SGC, the sales volume shrank by 30%-40% to 7,500-8,500t per month from July.
Asian Metal: How about the current demand for HRC in Vietnam?
Mr. Nguyen: Most companies using steel as raw materials for export face sales difficulties in the US and European markets dragged by the high inflation rates and the high energy prices. As a consequence, the consumption for HRC reduced in the domestic market. As far as we learn, downstream plants only maintain 60%-70% operation rates at the moment. Our sales volume reduced by about 30% YoY since early this year.
Asian Metal: HRC export prices from China witnessed a total markdown of about 26% (USD200/t) since early this year. Did prices in Vietnam go down accordingly?
Mr. Nguyen: HRC prices in Vietnam rose spirally from January to April and hit the yearly high level of VND22,800,000/t (USD932/t) by the end of April, up by about 13% from early this year. Prices kept going down from early May. Current prices remain around 30% lower than early May. Prices fall continuously and the market runs slowly dragged by the weak demand from downstream industries. End users remain cautious about purchasing seeing the downward price trend. Besides, the shrinking orders for final products weaken their purchasing activities to some extent. Seeing the poor sales performance, traders remain inactive in supplementing inventories. Discouraged by the unsatisfactory sales performance as well as the downward price trend in the international market, steel mills moved down HRC EXW prices in succession. The market witnesses watchful atmosphere.
Asian Metal: The European Union announced the decision to add HGI imported from Vietnam to the global quota list from July 1, 2022. Please talk about the influence on the market in Vietnam.
Mr. Nguyen: Vietnam could export HGI without the 25% safe-guard duty and the amount to European Union before July 1, 2022. In 2021, Vietnam exported about 900,000t of HGI to Europe. However, suppliers in Vietnam have to compete for 400,000t quota per quarter with suppliers from other countries now. As far as we know, the quota was sold out at the first several days of the third quarter. The EU’s global quota restricted the export market of HGI, leading to the shrinking demand for HRC in the domestic. We mentioned previously that the demand for HRC reduced by 30% YoY this year, and the restriction for HGI export acts as one of the main reasons. Though Europe faces energy crisis and the production of mechanical reduced, it does not release the loosening signal for HGI import yet.
Asian Metal: What about your thoughts for the demand and price trend of HRC in Q4 of 2022?
Mr. Nguyen: Personally, I believe prices of HRC would edge up by USD20-30/t in the fourth quarter of this year. In the short term, discouraged by the soar of energy prices, more and more steel mills in Europe suspended production. To make up the shortage, consumers in Europe will have to rely more on imports from China, India, Vietnam and other steel producing countries, which means the demand in Asia would improve. Meanwhile, steel mills in Asia face capital and sales pressures and cut production, leading to the reduced supply. In the long term, if the European market falls into recession, the demand for HRC would shrink accordingly, and prices might hard to go up further next year.
