Japan: Scrap export offers dip, suppliers resist further fall

Japan’s scrap export offers dipped further this week, owing to lower bids from South Korea- and Vietnam-based mills. SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 50,000/t FOB basis, decreasing by JPY 1,000/t w-o-w.

Factors leading to Japanese scrap price drop

• Lower bids from Vietnam: Japanese bulk H2 scrap offers are now at $495/t CFR levels Vietnam, down further by $5/t w-o-w, while bids are comparatively lower at $475-480/t CFR Vietnam. Buyers have remained quiet for the last few weeks. Hence, the price correction may bring steelmakers and buyers closer to get an overview of Japanese scrap offers. Meanwhile, the Vietnamese buyers prefer local scrap which is available at a lower price.
• SeAH Besteel lowers bid for Japanese scrap: South Korean steel major SeAH Besteel lowered the bids for Japanese higher-grade scrap in a few contracts signed recently. The new contract price was at JPY 57,000/t for shredded scrap, down by JPY 1,000/t ($9/t) compared to last week, as per SteelDaily reports. However, bids for Shindachi-bara scrap are at JPY 65,000/t ($567/t) CFR, increasing by JPY 1,000/t ($9/t) from the previous week.Other markets like Bangladesh and China have continued to keep away from placing bids for Japanese scrap this week.
• South Korean mills cut domestic scrap purchase prices: Major Korean steel mills such as POSCO, Dongkuk Steel, and SeAH Besteel are all lowering scrap buy prices by KRW 10,000/t ($8/t), as per SteelDaily reports. Dongkuk and SeAH Besteel are also set to lower prices due to scheduled deliveries of previous bookings and falling imported scrap prices. Steel mills may prefer domestic scrap instead of paying a high price for imported scrap. 

Tokyo Steel keeps scrap purchase prices unchanged: Japan’s Tokyo Steel kept its domestic scrap prices unchanged this week, as the company adjusted its purchase price twice last week. The company continued to pay a bid price of JPY 55,000/t ($481/t) delivered to the Tahara plant located in central Japan and the Utsunomiya plant situated in the Kanto region.

Outlook

As per reports, Toyota Motor Corp, the world’s top-selling automaker, said earlier this month that it will start making up for production losses made in the last 7-months due to chip shortages in Dec’21 with its factories in Japan to return to normalcy.

Trade participants mentioned that further sharp price correction in Japanese scrap seems less likely as auto output is yet to see a recovery.