Japan’s electric-arc-furnace (EAF) steel producers have noted the thinning of inquiries on billet for exports as overseas buyers are expecting billet prices to soften together with lower scrap prices, sources in Tokyo and Osaka shared on March 16.
Late last week, Japan-origin SS grade 120-150mm billets were sold at around Yen 59,000/tonne ($540/t) FOB, being down Yen 1,000/t since the start of March or equivalent to $570-580/t CFR East Asia, according to sources.
“We have been receiving fewer inquiries for billet exports since the second week of March, and we have held off from offering any this week, as we need time to tell where the scrap prices will be going,” a procurement official from a mini-mill in Osaka explained.
Meanwhile, the country’s billet export prices should not be lower than Yen 58,000/t FOB to ascertain a minimum spread of about Yen 18,000-20,000/t between scrap and billet, as Japan’s scrap prices are still hovering high, and mills are paying around Yen 40,000/t for H2 grade scrap, according to him.
The Japanese mini-mills are usually not to export billets for profits but to maintain efficiency and productivity, Mysteel Global notes.
A sales official from a mini-mill in Tokyo believes no steel producers are in any hurry to export billet anyway, as most must have fully sold their quantities when billet prices had been rising in February, and now they are just to fulfill the signed contracts.
“We are in no hurry to sign new export deals, and we can afford to wait and see until we are sure how much we should be offering our billet for exports,” he shared, adding that, “we just need to be sure that we are not making losses, and the export prices should at least cover our input costs.”
The latest available data from the Trade Statistics of Japan showed that Japan exported 64,690 tonnes of billet in January, down 11.5% on the year and 34.7% lower on month, and the volume was also 34.8% lower than the monthly average for the calendar year of 2020, though the billet export price averaged Yen 49,361/t FOB in January, up Yen 6,117/t on year and Yen 4,092/t on month.
Japan’s lower billet exports in January were more to do with the domestic producers’ reluctance to sell more around last November when scrap prices were surging, according to the market sources. It usually takes two months to deliver the export tonnage, Mysteel Global understands.
— Written by Yoko Manabe, yoko.manabe@mysteel.com
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