Bids for Japanese scrap fall, but rebound likely

The Japanese scrap rally, which had hit an all-time high, has created a panic situation globally after Turkey’s imported scrap prices rebounded by over $50/t d-o-d yesterday. Though Japanese scrap export prices have shown some signs of weakness this week, the outlook is bullish and a rebound is expected.

On the other hand, prominent South Korean buyers of Japanese scrap have lowered their purchase bids. Yet, market players believe, South Korean buyers need to buy material from Japan itself as currently shipments from Russian counterparts are limited and the increased offers have already squeezed buyers’ margins.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 57,000/t ($493/t) FOB levels, unchanged w-o-w. 

Buyers’ price idea

•  Hyundai Steel lowers bids for Japanese scrap by JPY 500/t ($4/t): South Korea’s Hyundai Steel lowered bids for Japanese scrap yesterday by JPY 500/t ($4/t) compared to the last bid on 25 Feb’22, sources informed SteelMint. Bids for H2 grade are now at JPY 56,500/t ($488/t), while bids for HS grade are at JPY 62,000/t ($536/t) FOB. Increasing offers from suppliers and lower demand resulted in a lowering of bids.

• Korean mills raise domestic scrap buy prices: South Korean steel mills plan to raise scrap purchase prices by up to $12/t for all grades effective 28 Feb’22, as per SteelDaily. Hyundai’s Incheon, Dangjin plants will lift prices by KRW 12,000/t ($10), whereas the Pohang plant has planned a hike of KRW 15,000/t ($12/t). Dongkuk’s Incheon will raise prices by KRW 12,000/t ($10/t) till 5 Mar’22 and the Pohang plant by up to KRW 15,000/t ($12/t). SeAH Besteel will increase prices by KRW 10,000/t ($8/t) for saengcheol and KRW 12,000/t ($10/t) for other grades.
•  Bangladesh mills active in container bookings: No firm offers from Japan were heard for Bangladesh this week. However, mills remained active in booking containerized cargo.

Japanese scrap exports plunge 35% m-o-m in Jan: Japan, a leading importer of ferrous scrap, recorded 0.29 million tonnes (mnt) of export sales in Jan’22 as against 0.47 mnt in Dec’21, down 38% m-o-m, as per customs data. South Korea was the largest importer with 0.21 mnt, followed by Vietnam and Malaysia with 0.03 mnt and 0.01 mnt, respectively. The m-o-m fall in exports in January was largely due to Japanese suppliers showing little interest in lowering offers further amidst tight domestic scrap generation on lower automobile production and strong domestic demand.

Outlook: Consumption by steel mills is expected to increase in March during the peak season while supply and demand are expected to become tighter.