Japan: Scrap export prices continue to move up, despite low demand

Japanese scrap export prices continued to move up even after conclusion of the Kanto scrap export tender last week. Bid prices in the October Kanto tender fell by JPY 1,175/t ($8/t) from JPY 51,040/t ($357/t) in September.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 49,000-50,000/t ($323-330/t) FOB, moving up significantly by JPY 500/t w-o-w. 

Additionally, limited scrap availability and increasing demand in the domestic market helped prices to keep increasing. The country’s electric arc furnace (EAF) steel manufacturers’ profit margins have declined in H1CY2022 due to soaring electricity costs. Electricity costs have risen majorly because of surging fuel (natural gas and coal) prices against the backdrop of Russia’s invasion of Ukraine. 

Buyers opt to wait and watch

• South Korean buyers stay away from Japanese market: South Korea’s largest steel producer, Hyundai Steel’s Dangjin works’ scrap procurement and consumption has reduced to half of its usual level. The strike at the plant, which started from October 2022, has adversely affected demand for scrap in the factory. Other major mills have also not bid this week for Japanese scrap.
• Bangladesh buyers maintain silence: Major Bangladeshi mills are continuing to maintain a distance from the Japanese scrap market. Despite the limited demand from end-users, buyers continued their bulk booking from other origins at lower prices. 
• Vietnamese mills slow down production: Vietnam’s imported scrap buyers and steel mills remained less active due to lower demand for finished long products in the domestic as well as overseas markets. In addition, some mills have cut their production and are running at 50% capacity. Indicative offers for Japanese bulk H2 to Vietnam were heard at around $385/t levels, inching down by $5/t w-o-w. 

Japan’s Tokyo Steel lifts scrap buy prices by $3/t: Japan’s major EAF steelmaker, Tokyo Steel, has increased scrap buy prices for the first time this month. The company raised bid prices for H2 scrap by JPY 500/t ($3/t) for all of its plants. Post-revision, prices of H2 scrap stand at JPY 49,000/t ($329/t) delivered to the Tahara plant and JPY 50,000/t ($336/t) to the Utsunomiya plant. 

Outlook: Japanese suppliers are likely to push up scrap export volumes as the continuous depreciation in the Japanese yen is seen as helpful for exports. The yen has hit a 32-year low against the dollar. The yen is trading at 150.9 in the currency exchange market, down further from 146.1 recorded a week back.