Japanese scrap export offers fall on limited demand, market awaits Kanto tender results

After witnessing a continuous uptrend in October 2022, the Japanese ferrous scrap export market turned bearish as weak demand prevailed, putting pressure on suppliers to lower scrap export prices.

Meanwhile, prominent scrap-buying countries like Vietnam, Bangladesh and South Korea are waiting for the upcoming Kanto tender outcome which is scheduled on 9 November 2022. A few deals might conclude after the results, SteelMint expects.

Overseas buyers noticed that Japanese offers were too high in contrast to continued weak demand in the markets. The Japanese scrap market weakened, and started following the global ferrous scrap market footsteps.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 48,000-48,500/t ($326-330/t) FOB, falling significantly by JPY 1,500-2,000/t ($10-14/t) w-o-w.

Buying market stays on sidelines

• South Korea’s buyers extend silence: The country’s major steel maker, Hyundai Steel, took a pause from buying Japanese scrap last month amid a slowdown in demand for rebar. Inventories of its all major steelmakers increased to 821,000 tonnes (t) in the final week of October, an increase of 76,000 t from last week. Thus, mills restricted buying for the time being.

However, there is a rumour that Daehan Steel has signed a contract for 10,00 t H2 scrap at JPY 49,000/t FOB.

• Imported scrap prices in Vietnam fall: The Vietnam market remained gloomy due to negative finished steel demand in the construction sector amid a liquidity crisis. Indicative offers for bulk H2 stand at $375/mt CFR, down by $5/t w-o-w.
• Bangladesh mills prefer US material: Major Bangladeshi mills are continuing to maintain silence for Japanese material due to price disparity with US scrap. Price indications for Japanese bulk H2 are at $425/t CFR, while Indicative offers for US-origin bulk HMS (80:20) were heard at $390-400/t CFR, down $10-20/t w-o-w.

Other factors impacting market

• Tokyo Steel trims scrap buying prices: Japan’s major EAF steelmaker, Tokyo Steel, has reduced scrap buy prices for the first time this month. The company raised bid prices for H2 scrap by JPY 500/t ($3/t) for three of its plants, effective 2 November. Post-revision, prices of H2 scrap stand at JPY 49,500/t ($335/t) delivered to the Utsunomiya plant while prices for Tahara works remained stable.
• National currency largely stable: The national currency is largely range-bound against the dollar. The yen is trading at 147.71 in the currency exchange market.

Outlook
It is highly expected that export prices would fall further as major importing countries are reluctant to buy scrap at higher rates.