Japan’s rebar producers have shown greater interest in exporting billet for its strikingly higher margins and at the same time lower-than-desired rebar prices in the domestic market, sources shared on May 14.
Bids from overseas for Japanese billet have increased immediately after the scrap export tender result release on Tuesday, and the prices are incredibly attractive against the domestic rebar prices, they noted.
“We are planning to raise our billet exports to make up for the low-priced domestic sales in profits,” a sales official from a rebar producer in Osaka shared. Japanese mini-mills’ billet exports are not meant to maximize margins but to maintain efficiency and productivity, but the price variation is too attractive, he added.
As of Thursday, bids for Japan’s SS grade 120-150mm billet from buyers in South Korea and China were around Yen 80,000/t FOB, up Yen 4,000-5,000/t from May 11 when the latest scrap export tender result was released or up Yen 15,000/t on month, and almost matching Japan’s domestic base rebar prices, sources shared.
The winning bid for the latest May H2 grade scrap export tender, held by the Kanto Tetsugen alliance of scrap dealers around Tokyo, was at Yen 49,270/t FAS ($449/t), being a 13-years high or up Yen 5,889/t on month, as reported.
The possible domestic steel scrap prices because of the tender, thus, has prompted some Japanese rebar producers to raise their spot rebar offering prices or the others to have suspended their rebar offers to the domestic market that included Kyoei Steel’s Yamaguchi works in western Japan, as the steelworks halted offering rebar immediately on Tuesday, Mysteel Global notes.
The Oscar sales official commented that higher spot rebar prices would achieve the same result as halting offering, as any offerings at around Yen 85,000/t or above for the base-sized rebar are just too high against the actual transaction price now at about Yen 80,000/t at the highest.
“No customers will agree on such a sudden and sharp price rise, while overseas bid for billet is almost the same as our domestic rebar prices, so why not export billet?” he said.
A sales official from a rebar producer in Tokyo predicted that the domestic rebar price increment by the domestic steel producer has just started.
“We are thinking of raising our price to Yen 85,000/t at least for the base-sized rebar, but this is not the end, as we will have to target Yen 90,000/t soon in answer to the rapid scrap price rise,” he said, adding, “for the continuity of our business, we will prioritize billet export too if domestic rebar price does not rise as fast as we expect.
In March, Japan exported 117,607 tonnes of billet, down 18.6% on year but up 15.7% on month, and the export volume added up to 283,976 tonnes over January-March, or down 5.2% on year, according to the latest data by the Trade Statistics of Japan.
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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