Japan: Ferrous scrap export up 7% in FY’21, Vietnam emerges as the largest importer

Japan- one of the largest ferrous scrap exporter observed a slight increase of 7% in FY’21 (Apr’20-Mar’21) and stood at 8.57 mn t compared to 8.03 mn t in FY’20. Exports to Vietnam increased to 3.24 mn t in FY’21 compared with 2.6 mn t in the previous fiscal. Vietnam’s scrap consumption remained high on firmer steel demand in domestic and export markets. More construction projects have resumed after Covid-19 measures were relaxed in North Vietnam. Its billet exports have become more active with Chinese demand rebounding. For instance, Hoa Phat fired up its fourth blast furnace at the Dung Quat iron and steel production complex in Jan’21.

On the other side, exports to South Korea witnessed a decline from 3.5 mn t in FY’20 to 2.6 mn t in FY’21.

In addition, Taiwan and Bangladesh also increased their import of scrap from Japan in FY’21 against CPLY and stood at 0.95 mn t and 0.80 mn t respectively.

After China opened to ferrous scrap imports this year, enquiries from Chinese buyers picked up and the country imported 0.09 mn t from Japan against 0.03 mn t in FY’20.  The new standard is likely to improve Chinese ferrous scrap import volumes as a sharp hike in iron ore prices in China has also resulted in Chinese mills lifting bids for Japanese scrap.

Key highlights for Mar’21 –

• Japan has witnessed an increase in its ferrous scrap exports of 13% m-o-m to 0.7 mn t in Mar’21 against 0.62 mn t in Feb’21.
• SteelMint assessment for Japanese H2 bulk scrap offers to Vietnam moved down by $44/t in Feb’21 and stood at $413/CFR Vietnam basis.
• Japanese ferrous scrap exports have surged this year in response to weaker domestic steel demand, and exporters are actively looking for more overseas markets to take a surplus of domestic scrap supply, SteelMint assessment for bulk H2 drops by JPY 1,600/t and scrap suppliers started lowering their offer prices to Asian countries to attract more sales.

Outlook– Japanese scrap export is likely to increase further and Chinese buying of Japanese scrap is likely to be a major driver of Japanese ferrous scrap market.