East Asia: H2 scrap prices ease $5/t w-o-w as weak Vietnam demand, cheaper alternatives weigh

• South Korean buying interest rises on favorable won
• Deep-sea scrap prices ease on competitive offers

Japan’s H2 ferrous scrap export market remained subdued during the week ended 17 August, with summer holidays in Japan limiting trading activity and weak Vietnamese demand weighing on sentiment. Tight freight availability and competitively priced alternative raw materials, particularly Russian A3 (HMS 80:20) scrap, further pressured Japanese offers. Meanwhile, a favorable South Korean won supported buying interest from mills, providing some support to regional demand.

Weekly assessments

• Japanese H2 scrap was at $355/t CFR Vietnam, down by$5/t w-o-w.
• Japanese H2 scrap was at JPY 48,500/t ($305/t) FOB Tokyo Bay, stable w-o-w.
• US-origin HMS 80:20 bulk stood at $370/t CFR Vietnam, down by$2/t w-o-w.

Japan

Japanese H2 scrap export prices were assessed at JPY 48,500/t ($305/t) FOB Tokyo Bay, unchanged w-o-w, according to BigMint. Trading activity remained limited as Japanese market participants observed the Mountain Day holiday on 11 August and the Obon holiday period from 13-16 August, reducing fresh offers and transactions.

In Vietnam, Japanese H2 offers softened to around $355-360/t CFR, with some offers heard as low as $350/t, while buyers targeted $345-350/t, with bids as low as $340/t. Weak finished steel demand and attractive alternative raw materials kept Vietnamese mills cautious. Russian A3 scrap was available at around $358-360/t CFR, with offers at $370-375/t, limiting the competitiveness of Japanese material.

Higher freight costs also weighed on buying interest, with freight for 8,000-10,000-t cargoes from Japan to Vietnam heard as high as $55-58/t amid tight vessel availability. Market participants attributed the shortage partly to strong bookings by Chinese mills for other steelmaking raw materials.

Vietnam

Vietnamese mills remained reluctant to make fresh purchases despite limited Japanese scrap availability. Some buyers were sufficiently stocked, while billet remained an attractive alternative to imported scrap.

The deep-sea scrap market in Vietnam remained subdued, with cautious mill buying and competitive alternative offers limiting price movement. Bulk HMS 80:20 offers were heard at $370-375/t CFR Vietnam, against bids of $360-365/t. US-origin HMS 80:20 containerized scrap was offered at around $330/t CFR, with bids near $325/t.

The availability of competitively priced Russian scrap and weak mill appetite continued to limit upward price momentum.

South Korea

Buying interest for Japanese scrap increased amid a favorable won, with mills finding Japanese material more competitive. A Japan-origin H2 transaction was reported at around JPY 53,000/t CFR South Korea during the last week, although market participants differed on whether the cargo was a 50:50 H1/H2 mix.

Overall activity remained subdued due to the summer holiday period in both Japan and South Korea.

Outlook

Japan’s H2 export market is likely to remain subdued in the upcoming days as holiday-related inactivity, cautious Vietnamese buying and elevated freight costs weigh on trade. However, stronger South Korean interest and limited Japanese seller availability could provide some support. Competitive Russian and deep-sea scrap offers are expected to cap any significant price recovery until regional finished steel demand improves.