Japanese scrap export offers continue to decline for another successive week, owing to lower bids received from overseas markets like Vietnam and South Korea. SteelMint’s assessment for Japanese scrap export prices stands at JPY 51,000/t FOB basis, decreasing by JPY 500/t w-o-w.
Why have prices come under pressure?
- Offers to Vietnam fall further: Japanese bulk H2 scrap offers are now at $500/t CFR levels Vietnam, down by $5 /t further against offers reported on Monday. Buyers would likely resume Japanese cargo bookings as there has been an over $50/t price correction since the start of Nov’21. The bid prices remained lower at $480-485/t CFR levels. Discrepancies in bids and offers slowed down trade.
- Hyundai Steel cuts bids for Japanese scrap by $17/t: South Korean steel major Hyundai Steel has slashed bids for Japanese ferrous scrap while booking the bulk cargo earlier this week. Bids were set at JPY 49,500/t ($433/t) for H2 grade and have been reduced by JPY 2,000/t ($17/t) for H2 grade compared to the last bid on 5 Nov’21. Around 80,000 t of bulk scrap have been booked at a presented bid.
Following Hyundai Steel, SeAH Steel Besteel also reduced the Japanese scrap purchase price. The bid price is now set at JPY 64,000/t CFR and JPY 58,000/t CFR for shindachi and shredded respectively.
- South Korean mills prefer domestic scrap: South Korean mills are expected to prefer domestic scrap over imported bookings, owing to local scrap being available at a lower price. Dongkuk Steel has lowered its scrap purchase price for its Inchon plant by KRW 10,000/t.
- No firm bids from China and other markets: Other Japanese scrap buyers like Bangladesh and China have remained quiet. The disparity in bids and offers and acceptable prices from other prospective sources kept buyers away from the Japanese market. Bangladesh mills continue to prefer EU and USA-origin bulk scrap cargoes over Japanese.
Gap between export and domestic prices widens further: Japan’s domestic scrap offers and export prices have widened further. Tokyo Steel has cut domestic scrap purchase prices twice this week by up to JPY 1,000/t ($9/t) for two of its plants. The company would now 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.
Prices in JPY
Source: Tokyo Steel
Kanto is a significant scrap export location in Japan. Hence, the overall price has now widened to JPY 5,500/t ($48/t) between the export price based on Hyundai Steel’s bid and domestic purchase price for H2 at JPY 49,500/t.
Outlook
Japanese domestic scrap prices may witness some correction given the price disparity in export realizations amid drop in bids from overseas buyers.
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