Steel Products Prices North America

Foreign Steel Imports: Goodbye China, Hello Vietnam!

December 17, 2015

On July 28, 2015 the U.S. steel mills filed antidumping and countervailing duty trade suits on cold rolled steels against China, Brazil, Russia, India and Korea. Of the countries named, China was by far the largest exporter of cold rolled steel to the United States and the country with the biggest target on its back. For those involved with the trading of Chinese cold rolled and those buying tonnage from Chinese mills the reason was obvious – the trading companies representing the Chinese mills were willing to sell at numbers well below the prices being offered in the rest of the U.S. market.

In August, shortly after the cold rolled suits were filed, a trading company told SMU that essentially the traders brought these suits upon themselves. We were told, “If you’ve been making a living giving away Chinese materials, then yeah life should be tough, because you earned it. There are potential replacements, but not to this scale and the ability to establish continuity with these sources depends on traders exercising some common sense.” This trader then went on to point to two countries that could potentially take up some of the slack left behind as the Chinese mills exit the U.S. market, “There are smaller countries/producers that should be able to fly under the radar, provided the usual idiot traders don’t screw it up by overdoing it (see Brazil and/or Vietnam, they’re next in line to get hammered).”

A number of months ago the questions being asked by both buyers and steel traders was what country or countries would replace the tons coming from China into the United States. It was a foregone conclusion that China would be hit hard in the Antidumping (AD) and Countervailing Duty (CVD) cold rolled and coated suits filed by the domestic steel mills. As we look at the license data for the first 15 days of December we are beginning to get a clearer picture of one of the countries traders have turned to: Vietnam.

With the cold rolled CVD and Critical Circumstances preliminary determination having just been released, SMU thought now would be a good time to take a look at the Vietnamese imports to see if they were meeting the hype we had been hearing over the past six months.

Vietnamese mills, and the trading companies representing their interests, have applied for 34,263 net tons of cold rolled licenses for December. This is for the first 15 days of the month…

In November Vietnam requested a total of 7,048 net tons of CR licenses. Since the beginning of the year, the country has been averaging 1,700 net tons per month of cold rolled exports to the USA.

We are also seeing growth in galvanized exports out of Vietnam (which was also anticipated based on conversations with buyers and traders). So far this month we have seen Vietnamese traders requesting 11,041 net tons of HDG licenses. For the entire month of November HDG licenses totaled 9,342 net tons. During the first 11 months 2015 Vietnam averaged 1,400 tons per month.

To put some of these numbers into perspective, the goal of the U.S. steel mills has been to reduce the percentage of foreign steel imports with a particularly large target being on China when it came to cold rolled and corrosion resistant products. For the first 9 months 2016 China exported an average of 58,000 net tons per month of cold rolled to the U.S. When it comes to galvanized, during the first 8 months China exported an average of 85,911 net tons to the USA.

Steel buyers have been telling Steel Market Update as recently as earlier this week that the Vietnamese offers are the cheapest out there on cold rolled. However, there are only a limited number of Vietnamese steel mills and they can only produce and ship a relatively small amount of steel. We asked one service center head of purchasing about the Vietnamese offers and how many tons did they actually have available to sell and we were told, “That is a great question. Has that same feeling the old Russian hot rolled offers had. Feels like it’s 10x bigger than it really is because you get the same offers for the same mills from 10 people. I guess only time will tell.”

If Vietnam ends the month of December with 50,000+ tons of cold rolled import licenses we may have our answer.