Japan: Scrap export offers hit two-month high, trades improve

Japanese scrap export offers continue to move up in the beginning of the new month. Tight availability, and high domestic and overseas demand have kept scrap offers high. Prominent scrap buyers like South Korea and Vietnam increased their inquiries for booking mostly for high-grade material.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 49,000-50,000/t ($349-356/t) FOB, a sharp hike of JPY 3,000-4,000 ($21-28/t) w-o-w. Prices have hit two month high since beginning of July. 

Buyers’ market overview

• South Korean mills lift bids for Japanese scrap: Hyundai Steel’s bid for Japanese scrap increased sharply by JPY 7,300/t ($53/t) for H2 and by JPY 7,500/t ($54/t) for higher-grade scrap as against the last bid presented on 18 August. Bids for H2 scrap stands at JPY 49,800/t ($360/t), while those for HS are at JPY 55,500/t ($401/t) FOB. The traditional peak season of the steel market, limited scrap stocks with mills and recovery in Japanese scrap export prices resulted in the hike in bids.

Meanwhile, another prominent Japanese scrap buyer POSCO has presented a bid for high grade material. Bid for Japanese shredded is now set at JPY 57,500/t CFR ($410/t), HS at JPY 59,500/t ($425/t) and Shindachi press at JPY 59,000/t CFR ($420/t) basis.

On the other hand, imported Russian A3 material was booked in bulk earlier in the week by two South Korean steel mills. The 40,000 t cargo was booked at an average price of $425/t CFR. The import prices were relatively high as compared to Japanese material.

Furthermore, South Korea’s major steelmakers have increased their domestic scrap procurement prices twice this week by KRW 40,000/t ($30/t), as per a Steel Daily report. Hyundai Steel will lift prices for its Incheon and Dangjin plants, POSCO for its Pohang and Gwangyang plants, and Dongkuk Steel for its Incheon and Pohang plants. Similarly, SeAH (Besteel and Changwon) is considering a price hike for all scrap grades.

• Vietnamese mills book Japanese material: As imported Japanese scrap prices started increasing, Vietnamese buyers returned to the market with a few deals heard to have been booked. In recent deals, around 10,000 t of bulk Japanese H2 was booked at an average price of $415/t CFR. Prices for imported scrap in Vietnam continued to increase due to bullish sentiments. Whereas, earlier in the week, a Vietnamese steel mill booked a 2,000 t Australian cargo at $400/t CFR.

Meanwhile, imported scrap offers too have increased to $420-430/t CFR for H2 material. However, trade is likely to pick up after the weekend and holidays in Vietnam.

• Bangladeshi buyers prefer deep sea cargoes: Bangladeshi bulk scrap buyers booked around 5-6 bulk deep sea and Baltic origin cargoes in August. Japanese material remained out of reach for scrap buyers. However, people are likely to book more cargoes for the upcoming winter season to restock material in view of the uptick in construction activities. 

Tokyo Steel increases scrap buy prices: Japan’s major EAF steelmaker, Tokyo Steel, has increased scrap procurement prices thrice this week. The company increased bids for H2 scrap by up to JPY 5,500/t ($40/t) for all its plants. After the adjustment, bid prices for H2 scrap are at JPY 48,500/t ($350/t) delivered to the Tahara plant in central Japan, while prices for the Utsunomiya plant are now at JPY 48,000/t ($346/t) in the Kanto region.

Outlook:  Scrap prices are moving up much faster than steel prices and it’s been a really tough situation for steel mills, SteelMint learnt from sources.