Japan: Scrap export shipments drop 14% in H1CY’21

Japan, one of the world’s leading ferrous scrap exporters, registered a significant drop in volumes in H1CY’21. Export shipments dropped to 4.07 million tonnes (mn t) in H1CY’21 against 4.76 mn t seen in H1CY’20, as per customs data maintained with SteelMint. All traditional export destinations like Vietnam, South Korea and Bangladesh have witnessed a decline in imports from Japan except China.

Export volumes from Japan fell on account of strong demand for domestic scrap, increased freight rates, lesser availability of vessels and disparity in bids and offers.
Notably, Japan’s crude steel production was recorded at 48.1 mn t in H1CY’21, up by 14% y-o-y according to the data released by the World Steel Association. This signifies increased domestic consumption of scrap and lower exports.

Factors responsible for fall in scrap exports in H1CY’21

• Limited deals from Vietnam: South East Asia’s largest ferrous scrap importer, Vietnam, imported 1.46 mn t of scrap in H1CY’21, a drop of 7% y-o-y against 1.57 mn t in H1CY’20 due to limited trade options available owing to sharp hike in freight rates which made suppliers wary of putting forward fresh offers.
• Weak demand in South Korea: South Korea, one of the largest buyers of seaborne ferrous scrap, recorded imports of the material at 1.39 mn t in H1CY’21, down by 12% as against 1.58 mnt in H1CY’20. Preference for domestic scrap amid high imported scrap offers from Japan resulted in lower imports from this Asian country.
• Bangladesh scrap imports drop: Bangladesh reported a significant 28% drop in scrap imports to 0.28 mn t in H1CY’21 as against 0.39 mn t in H1’CY20 as per data recorded by SteelMint. Due to higher freight rates, Bangladesh-based mills focused on booking bulk scrap from the US and other sources.

Outlook
With lockdown restrictions being imposed in Vietnam and Bangladesh, demand for imported scrap is expected to remain on the lower side. Also, in the past one month, bookings from China have slowed down due to bid-offer disparities and preference for imported billets. Thus, all the above factors may keep scrap exports from Japan on the lower side.