South Korea’s major steel manufacturing giant POSCO (Pohang Iron and Steel Company) hiked its bid for Japanese scrap grades yesterday, finally narrowing down the wide gap between offers from Japanese suppliers and South Korean bid for scrap export price.
In latest bids presented by POSCO, the price for Japanese HS and Shredded scrap is now set at JPY 29,000/t CFR and JPY 28,500/t CFR Korea, which is equivalent to around JPY 26,500/t ($ 247) and JPY 26,000/t ($ 243) FoB Japan basis, respectively, putting Japanese H2 scrap at JPY 24,000/t FoB Japan. The bids have increased by JPY 2,000/t in comparison to last bids presented by Hyundai steel at just JPY 22,000/t FoB basis on 13th July’20.
Japanese scrap export price trend in July’20
At the beginning of July, in continuation with downtrend of June’20, the Japanese scrap export prices kept plummeting, and bottomed out at around JPY 22,500-23,000/t FoB Japan for H2 scrap, by the end of first week. By this time, the Japanese suppliers had started holding back their export offers, amid very low price level.
On 9th July, the result of Japanese monthly scrap export tender- Kanto Tetsugen’s, was announced in which the bid for H2 scrap stood at JPY 23,574/t FAS Japan, equivalent to around JPY 24,500/t FoB Japan, which was at least JPY 1,500-2,000/ t higher than the prevailing price in the market.
Following the Kanto result, the Japanese suppliers immediately hiked their offers to at least JPY 24,000/t FoB Japan for H2 scrap. However, the South Korean major buyers, resisted the sudden increase in prices, still bidding at a considerably low level at that time.
On 13th July, Hyundai Steel presented its bid for Japanese scrap, at JPY 22,000/t FoB Japan for Japanese H2 scrap. These bids were considered as completely unworkable price levels by the Japanese suppliers. On the other hand, South Korean steelmakers increased their preference for USA and Russian grade scrap during this time and increasingly procured domestic Korean scrap also.
The wide gap between the Japanese offers, and bids by South Korean buyers, persisted for around two weeks until yesterday, when POSCO finally hiked their bids.
Japanese domestic scrap price
Meanwhile, in the Japanese domestic scrap market, Tokyo steel has not made any price revision this week as yet, after a small hike in price was observed during last week’s opening in the Kanto region, and further increase is being expected in the coming days.
Currently, Tokyo steel’s scrap purchase price stands at JPY 22,000/t and JPY 22,500/t for H2 scrap delivered to Utsunomiya works in the Kanto region and Tahara plant in central Japan, respectively.
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