Vietnam's ferrous scrap imports in July fell to their second-lowest monthly level this year, as demand was dented by subdued production and weaker trading activity.

 

Imports of ferrous scrap in July fell by 61.4pc from the previous month and 69.2pc against a year earlier to 217,000t. This took January-July imports down by 33.9pc from the previous year to 2.75mn t, Vietnamese customs data showed.

 

The fall was driven by low capacity and utilisation rate at steel mills, coupled with a lack of market confidence about any steel demand recovery in the second half of the year.

 

The trading period for cargoes that arrived in July was mid-May to the end of June when the steel market was in a falling trend, which forced Vietnamese mills to cut production to maintain domestic steel prices at a profitable level. Domestic steel producers were also unwilling to restock ahead of the autumn peak season because of macroeconomic and geopolitical uncertainty.

 

Imports in August and September are likely to rebound, as Vietnamese buyers restocked from overseas when European cargoes and Japanese scrap fell to workable levels with muted international markets. The Japan H2 fob price slumped to an 18-month low at $284/t on 8 August, which was cheaper than Vietnam's domestic scrap price and for premium quality supplies. But market participants expect overall scrap demand to stay at a low level until mills see substantial demand from the steel sector and raise production.