Downtrend in Japanese scrap export price continues, hike in freight rates worry suppliers

• Dongkuk Steel’s bid falls by JPY 1,000/t against last week’s bid by Hyundai
• South Korean mills book two bulk US cargoes
• Tokyo Steel slashes scrap prices twice this week

With the recent hike in freight rates, Japanese scrap export trades have slowed down. Increased freight rates and less vessel availability are posing additional risks at the moment. Hence, scrap offers declined further.

SteelMint’s assessment for Japanese H2 scrap export stands at JPY 41,000/t ($377) FoB, registering a sharp fall of JPY 3,000/t ($28) w-o-w.

Japan’s Kansai scrap export tender bids fall by $28 against Kanto tender: Japan’s Kansai-Cheorwon, scrap export tender for Mar’21 was concluded this week. The winning bid was awarded 5,000 t of Japanese H2 at an average price of JPY 39,950/t ($366) FAS, up by JPY 945/t ($9) as compared to the previous Kansai tender of Feb’21. The tender price has decreased significantly by JPY 3,026/t ($28) as compared to Kanto tender, concluded last week.

South Korean mills lower bids for Japanese scrap: South Korean mills remained active this week for booking bulk cargoes. Three bulk cargoes have been booked so far this week for May arrival. Due to high scrap prices from Russia and Japan, South Korean mills have started inquiries for US cargoes.

• Around 45,000 t of USA origin, HMS 1 have been booked by Hyundai Steel at $431/t CFR basis
• In another deal, Dongkuk Steel has booked 30,000 t of the same grade from USA origin at $432/t CFR basis
• Prior to this, Dongkuk Steel has signed a contract for 20,000 t of bulk Japanese H2 scrap cargo earlier in the week. The price for H2 scrap was reported at JPY 41,000/t ($376) FoB basis. The price is around JPY 1,000 lower than Hyundai Steel’s bid placed last week.

Limited firm offers floated for Bangladesh & Vietnam markets: Increased freight rates from Japan to Bangladesh and Vietnam have kept the majority of scrap exporters quiet. Most of the suppliers are not interested to sell big volumes on longer distances due to volatility in vessel freight rates and the current logistics situation, sources have confided to SteelMint. Price indications for bulk Japanese H2 are now at $445-450/t CFR Vietnam.

Japanese domestic scrap prices fall as Tokyo Steel cuts bids: Japan’s leading EAF mill – Tokyo Steel has lowered its scrap purchase price twice this week for four of its plants by JPY 500/t ($5). The company is now paying JPY 41,500 ($380) and JPY 41,000 ($370) for H2 scrap delivered at Tahara and Utsunomiya respectively. H2 scrap prices in its Tahara work have come down to similar levels seen in early Mar’21. As SteelMint estimated, a reduction of JPY 1500/t has been affected so far in the Utsunomiya factory (Kanto region).

Outlook: Japanese suppliers have opted to wait and watch for now as increased freight rates are causing a loss to the suppliers.