Japan’s electric-arc-furnace (EAF) steel producers have been receiving active inquiries for billet from Chinese buyers and bid prices are trending upwards, according to sources in Tokyo and Osaka on July 28. But actual billet exports are unlikely to increase due to limited availability, they said.
Bids for Japan-produced SD295A 120x150mm billets are at around Yen 74,000-75,000/tonne ($674-683/t) FOB currently, which translates to around $710-720/tonne CFR China, up $5/t on week, sources shared.
“Inquiries from Chinese buyers for Japanese billet have been very active, especially in the past few weeks,” a sales official from a mini-mill in Osaka explained, suggesting that maybe imported Japanese billet would allow Chinese mills to reduce their crude steel output (as Beijing has instructed) but will allow them to keep their rolled product supply volume stable.
“But demand for Japanese rebar from South Korean buyers is also active so we need to consume a lot of billets ourselves. We don’t have much availability for billet exports,” he told Mysteel Global.
The steel mill official said SD2095A 16-25mm rebar export prices for South Korea are around Yen 88,000-89,000/t FOB. “The rebar price for export is about Yen 14,000-15,000/t higher than billet, which is enough to cover our rolling costs for bars, so we’d prefer to export rebar at higher prices,” he emphasized.
He added that prices for Japanese rebars – which comply with Korean Industrial (KS) standard in terms of quality and specifications – can be sold at about Yen 5,000/t higher and that those Japanese producers who have secured KS mark approval for their rebars, have been more aggressive to export.
A Tokyo-based trader believed that extremely high scrap prices might be another factor making billet suppliers step back from exports to avoid risk. “Traditionally, (Japanese mills) export billet just to keep their production volume up to maintain stable output, and not to make a profit,” he observed. “But scrap has become very expensive and consuming such high-priced scrap just to keep the run-rates up in the steel shop doesn’t make much sense. This is why producers are looking to reduce billet exports and increase production of finished products such as rebars instead,” he observed.
The latest data from Trade Statistics of Japan showed that Japan exported 104,319 tonnes of billet in May, down 5.8% on year and 3.3% lower on month. Among the total, China was the top buyer of Japanese billet in May, taking some 27,142 tonnes, which was up 84% on year and 15% higher on month.
Japan’s rebar exports to South Korea in May totalled 41,800 tonnes, higher by 72.4% on year and up 16.7% on month.
Written by Yoko Manabe, yoko.manabe@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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