Japanese ferrous scrap prices fall on bearish overseas demand

After witnessing a continuous uptrend in prices for more than a month, the Japanese ferrous scrap export market turned bearish as demand turned weak, putting pressure on suppliers to lower their offers. However, Japanese suppliers are now focusing more on their domestic markets where they are seeing higher demand as well as prices compared to overseas.

Meanwhile, prominent scrap-buying countries like Vietnam and South Korea are seeing healthy flow of domestic scrap at low prices and, due to poor finished steel demand, mills are relying more on domestic supplies.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 51,000-53,000/t ($378-392/t) FOB, down JPY 300/t ($2/t) w-o-w.

Buyers stay on sidelines

• South Korea’s buyers extend silence: South Korean mills are strongly demanding a cut in Japanese scrap prices. Korean bids are already lower than the export offers from Japan. Hence, sellers are not keen to supply material to the Koreans. Moreover, Korean mills have enough inventories and domestic scrap prices are decreasing since the construction and real estate market is also very weak. This, in turn, has been impacting rebar sales.

Recently, Hyundai Steel’s bids for Japanese scrap fell by JPY 1,000/t($7/t) after almost a three-week gap. After revision, the company’s bids for H2 scrap stand at JPY 51,000/t ($378/t), and those for HS are at JPY 54,000/t ($400/t) FOB.

Similarly, Daehan Steel’s bids for H2 grade and HS grade on 21 February were at Yen 55,000/t ($ 407/t) and Yen 58,000/t ($429/t) respectively on CFR South Korea basis.

• Poor demand hits scrap prices in Vietnam: As finished steel sales are not good in Vietnam , prices for scrap have fallen . Also, a liquidity crunch is hampering infrastructure development in Vietnam.

Offers from Japanese H2 scrap suppliers were slightly higher at $445-450/t. Offers for US-origin HMS 1&2 (80:20) were heard at $455-460/t CFR Vietnam.

Other factors impacting market

• Tokyo Steel scrap purchase prices stable: Japan’s major EAF steelmaker, Tokyo Steel, kept domestic scrap buy prices unchanged for two weeks. Currently, prices of H2 scrap stand at JPY 53,500/t ($396/t), delivered to the Tahara, Utsunomiya, and Okayama plants.
• National currency largely stable: The Japanese national currency, yen, was largely range-bound against the dollar. The yen is trading at 135.06 in the currency exchange market.