Japan: Scrap export offers soften w-o-w on lower bids from buyers

Japanese scrap export offers softened this week after continuous hikes observed in the last three months. In the meantime, prices reached their peak and set an all-time high. But limited inquiries from overseas buyers pressured suppliers to lower their offers. Additionally, domestic demand is also not supporting increased offers.

On the other hand, Japan’s monthly Kanto Tetsugen scrap export tender for April, 2022, which was concluded last week, pushed up export prices. A total of 10,000 tonnes (t) of scrap was awarded and the average price for H2 material stood at around JPY 67,010/t ($534/t) FAS, higher by JPY 3,500/t ($28/t) m-o-m. The price hit a multi-year high since 2008, SteelMint learnt. But now overseas buyers are refraining from securing material at high offers from Japan and looking for an alternative source like the US that will prove to be more cost-effective.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 66,000/t ($514/t) FOB, down by JPY 500/t ($4/t) w-o-w.

Buyers stay away from Japanese market

• South Korean mills quiet: South Korea’s major mills, like Hyundai and POSCO, which were the most prominent Japanese scrap buyers, have remained quiet for the last couple of weeks. Interestingly, Hyundai Steel has not even presented its weekly bid for Japanese material after the last bid was on 7 April, before the Kanto tender outcome.
  In contrast, the South Korean mills, including Hyundai Steel, Dongkuk Steel, and SeAH Steel, cut domestic scrap purchase prices by KRW 10,000/t.
• Weaker steel market sentiments lower scrap bids in Vietnam: Another prominent buyer of Japanese material, Vietnam, has turned attention to other prospective markets like the US. The increased freights and disparity in bids and offers remained unsupported by Vietnamese steel mills. However, fresh offers for bulk Japanese H2 material have come down to $590/t CFR levels, down by $20/t w-o-w.
  On the other hand, Vietnamese mills prefer US-origin bulk cargoes. A deal for a US bulk cargo is heard to have concluded at $600/t CFR levels this week.
• Bangladesh bulk scrap market quiet: The ongoing holy month of Ramadan kept market activities slow. However, major mills have been successful in securing a few bulk cargoes from the US. Mills are likely to resume bulk booking for Japanese material soon for the next round of shipments after the Eid holidays.
  Despite the weak currency, scrap export offers are still at higher levels. Currently, the JPY has hit a multi-year low and is being traded at 128.59 levels against the dollar.

Tokyo Steel pushes up scrap prices by $4/t for Utsunomiya works: Tokyo Steel hiked scrap purchase prices for the third time this month. The company increased bids by $4/t for Utsunomiya works, while prices for the rest of the plants remained the same. Post-revision, the company’s bid price for H2 scrap stands at JPY 66,500/t ($526/t) delivered to Utsunomiya, effective 19 April. A hike in export prices further lifted domestic offers.

Some Japanese rebar producers have set their rebar list prices at JPY 120,000/t ($955/t) the country’s highest in the record to transfer the ever-rising scrap prices and other input costs since April, sources shared.

Outlook: Scrap export offers are likely to fall further due to limited interest from both overseas and domestic buyers. Currency depreciation remained the major factor.