Japan: Ferrous scrap exports drop 23% in CY’21 as domestic steel demand recovers

Japan, one of the leading ferrous scrap exporting countries, recorded 7.02 million tonnes (mnt) of overseas sales of the material in CY’21 (Jan-Dec’21) as against 9.11 mnt in CY’20, a 23% y-o-y drop, as per customs data maintained with SteelMint.

The y-o-y fall in exports in CY’21 was largely due to increased domestic scrap consumption  and higher domestic prices that held back Japanese suppliers from concluding a good amount of export deals. Notably, Japan’s crude steel output rose by 15% y-o-y to 96.3 mnt in CY’21.

However, on a m-o-m basis, Japan’s ferrous scrap exports rose by 2% in Dec’21, as per SteelMint data. The country exported 470,000 t of scrap in Dec against 460,000 t in Nov.

Reasons for fall in exports:

• Exports to Bangladesh decline: Japan’s exports to Bangladesh were recorded at 0.34 mnt in Jan-Dec’21, as against 0.87 mnt in Jan-Dec’20, marking a sharp drop of 61% y-o-y. High freight charges and elevated offers from Japan due to scrap shortage compelled buyers to prefer US/EU and other-origin material.

• Exports to South Korea rebound: South Korea overtook Vietnam as the leading importer in CY’21 with 2.98 mnt. The country was the only major buyer that registered year-on-year gains as against 2.86 mnt seen in CY’20, marking an increase of 4% y-o-y. South Korean mills preferred Japanese scrap due to comparatively higher domestic prices amidst insufficient supply.
• Exports to Vietnam drop amidst Covid concerns: Ferrous scrap exports to Vietnam dropped y-o-y in CY’21. The country remained the second-largest importer with 2.25 mnt, a decrease of 34% y-o-y as against 3.41 mnt in Jan-Dec’20. Vietnam’s import volumes from Japan saw a sharp decline of 45% in H2’21 as compared to H1’21. Demand from Vietnam turned subdued on stagnant domestic steel sales due to the impact of Covid-19. Other major reasons for decrease in imports from Japan were limited vessel availability, soaring freight rates, sluggish demand, as well as strong prices in Japan’s domestic market.

Outlook
Japanese traders expect export negotiations to be more active in Jan’22 as more suppliers started considering exporting as domestic prices declined. On the other hand, Japanese scrap demand from the major buying country, Vietnam may witness an uptrend with the increase in steel production capacity and government infrastructure projects.