Japan: Scrap export offers inch down on limited buying

Japan’s scrap export market mostly stagnated on the back of limited inquiries from overseas buyers. Scrap export offers continued to fall as Vietnamese and Taiwanese buyers did not show much interest. South Korean mills reduced their bids for Japanese material.

Japan’s domestic scrap supply and demand have slowed in the Kanto region.

Japanese H2 scrap prices are at JPY 54,000/t ($416/t), down by JPY 500/t w-o-w.

The country’s top electric arc furnace steelmaker, Tokyo Steel, lowered ferrous scrap bids by up to JPY 1,500/t ($13/t) for all its plants, effective 25 March, 2023. After the revision, prices for H2 scrap stand at JPY 54,000/t ($416/t), delivered to the Tahara, Utsunomiya, and Okayama plants.

Additionally, Japan’s steel exports rose by 2.5% y-o-y to 2.602 million tonnes (mnt) in February. This marked a slight increase for the second consecutive month. In February, business negotiations took place at a time when export inquiries were increasing and the global steel market had bottomed out as a result of China’s lifting of Covid curbs.

Further, Japanese crude steel output was down in February, mainly due to slow demand for finished products in the domestic market. The country produced 6.9 mnt of crude steel, down 5.3% y-o-y, decreasing by 6.9% m-o-m, according to data from Japan Iron and Steel Federation (JISF).

Top buyers

• South Korea: South Korea’s Hyundai Steel decreased bids for Japanese scrap by up to JPY 1,700/t ($13/t) after a gap of two weeks. Bids for H2 scrap now stand at JPY 52,300/t ($402/t) FOB and those for HS grade at JPY 56,300/t ($433/t) FOB. The company has trimmed prices due to reasonable domestic material availability. However, South Korean mills are likely to resume deals soon.

Ferrous scrap inventories of major South Korean steelmakers fell by only 12,000 t, or 1%, w-o-w as assessed on 22 March. Volumes totalled 871,000 t. Even during the peak spring season, inventories at steelmakers had not dropped. Inventory depletion is particularly slow.

• Vietnam: Import scrap prices of HMS bulk of US-origin are now at $460-465/t CFR Vietnam, with the bid-offer spread widening and the acceptable buying price at $450/t CFR. However, mills are cautious due to low finished steel demand.

Outlook: Scrap prices in Japan may fall further due to limited overseas demand. As a result, domestic scrap prices, too, may continue to decline.