Japan: Scrap prices decline as market awaits Kanto tender outcome

• H2 scrap offers for Vietnam drop further by $20/t
• Tokyo Steel cuts prices after almost a month
• Kanto scrap export tender scheduled for 11 May

Japanese scrap offers continued to decline for the third straight week. The weakened currency led to a drop in imported scrap prices. Following global prices, Tokyo Steel lowered the domestic scrap purchase price. Yet, the purchase price in the domestic market is still high, and if it declines, a sharp decline is less expected. Overseas buyers and steelmakers are likely to have low purchase intentions due to large inventory.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 62,000/t ($475/t) FOB, down by JPY 2,000/t ($15/t) w-o-w.

Market overview

• South Korea away from Japanese market: South Korea’s largest scrap Hyundai Steel, the largest importer did not bid for the fourth week in a row, due to Japan’s Golden Week, it was difficult to bid, resulting in a one-month gap. Hence the absence of buyers is likely to pull down offers. On the other hand, the company has cut its scrap purchase prices on 4th May for the Incheon and Dangjin works, as per Steel Daily. The company slashed purchase prices of all grades of scrap by KRW 10,000/t ($8/t). Following Hyundai Steel, other prominent steel mills like Dongkuk and SeAH Steel have also lowered the domestic scrap purchase price.
•  Offers to Vietnam drop further by $20/t: Southeast Asia’s major Japanese scrap importer Vietnam remained away from the Japanese market for the last couple of weeks. Limited demand for finished and semi-finished steel due to increased Covid cases are the major factors behind the slowdown in trade. However, fresh offers for Japanese bulk H2 material have come down further to $550/t CFR levels, down by a further $20/t against the price reported on Monday.
• Japanese scrap exports rise over 15%, m-o-m: Japan, a prominent ferrous scrap exporter globally, reported an 18% rise in exports of scrap in March 2022. The country recorded 590,000 t of scrap exports in March as against 500,000 t in February, as per customs data maintained with SteelMint. On a y-o-y basis, exports by Japan dropped 16% compared to 700,900 t in March 2021. Japan exported 330,000 t of ferrous scrap to South Korea in March 2022 as against 280,000 t in February, marking a hike of almost 18% m-o-m.
• Tokyo Steel cuts scrap purchase price by $8/t: Tokyo Steel has cut scrap buy prices after a gap of two weeks. The company has reduced bids by JPY 1,000/t ($8/t) for all its steelworks effective 7 May. Post-revision, the company’s bid price for H2 scrap stands at JPY 64,500/t ($495/t) delivered to Tahara, while prices for Utsunomiya are at JPY 65,500/t ($502/t). The drop in Japanese scrap export prices weighs on domestic prices.

Tokyo Steel domestic scrap bid price

Outlook: The Japanese market was mostly closed due to the Golden week holidays throughout the week. Hence the market is likely to resume next week. Suppliers anticipate market direction will clear after-market resumes and the Kanto tender result will be announced next week.

Japan’s monthly Kanto Tetsugen ferrous scrap export tender has been scheduled for 11 May’22, sources informed SteelMint. Last month a total of 10,000 t of scrap was awarded and the average price for H2 scrap stood at around JPY 67,010/t ($513/t) FAS, higher by JPY 3,500 ($27) m-o-m, SteelMint learnt from sources.