This week, Japan’s H2 scrap export offers remained steady amidst muted demand from major importing markets. This stability was linked to the recent Kanto tender, which was awarded at JPY 52,590/t ($338/t) for 20,000 tonnes (t) of H2 scrap on a FAS basis. This price marked an increase of JPY 1,503/t ($10/t) from the April tender and the cargo was destined for Vietnam. Following this, Tokyo Steel, a leading steel mill, also raised its bids for domestic scrap by JPY 1,000/t ($6/t) at its Utsunomiya plant, resulting in higher domestic FAS collection rates.
However, the market did not absorb the increased prices, and buyers aimed to purchase at lower levels than those offered.
According to BigMint’s latest assessment, Japanese H2 scrap export offers stood unchanged w-o-w at JPY 51,700/t ($332/t) FOB Tokyo Bay.
Additionally, due to rising scrap prices and increasing production costs, including labour, transportation, and electricity, a price increase has become inevitable to maintain a stable product supply system. As a result, Kogye Steel, Japan’s largest rebar producer, announced it would raise the selling price of rebar by JPY 5,000/t ($32/t) in June, marking the first price increase in three months since last March.
Other market updates
Vietnam: Japanese H2 scrap export offers to Vietnam remained steady at $370/t CFR. Some traders reportedly offered higher prices, around $380-385/t CFR, following an uptick in the domestic market. However, no deals were concluded as buyers adopted a wait-and-see approach, anticipating a drop in offers due to sluggish domestic demand.
South Korea: South Korean mills showed less interest in seaborne scrap following another decline in domestic scrap prices. For example, Hyundai Steel’s Pohang plant lowered its scrap purchase price by KRW 10,000/t ($7/t), effective 16 May, and is expected to shut down for approximately 20 days due to lower-than-expected demand.
Taiwan: Taiwanese mills remained silent amidst a bid-offer disparity and a softening domestic market. Offers of H1/H2 50:50 grade scrap were assessed at $365-368/t CFR, while buyers’ bids were around $358-360/t CFR. A trader noted that due to softening global scrap prices, market sentiment in Taiwan remained bearish as well.
Outlook
In the near term, Japanese H2 scrap export offers are likely to remain under pressure due to several factors. First, there is a lack of demand from major importing countries. Second, the depreciating JPY against the dollar is contributing to this pressure.