Japanese scrap export offers inch up further on improved bids

Japanese scrap export offers rose further as overseas buyers increased enquires. South Korean steel major Hyundai Steel presented a bid for Japanese scrap this week after a gap of four weeks, which serves as a benchmark for domestic steelmakers’ price ideas for Japanese scrap. Meanwhile, offers for other countries such as Vietnam, Taiwan and Bangladesh have increased too.

Furthermore, prices moved up in the recently concluded Kanto scrap export tender on 10 August. A total of 20,000 t of scrap was awarded and the average price for H2 material stood at around JPY 42,061/t ($312/t) FAS, SteelMint learnt from sources.

Prices have fallen by JPY 2,493/t ($19/t) levels from JPY 44,554/t ($330/t) in July. Notably, prices have fallen to a 16-month low on subdued market sentiments but may not drop further from here, SteelMint understands.

SteelMint’s assessment for Japanese H2 scrap export prices stand at JPY 42,000-43,000/t ($307-314/t) FOB, up by JPY 1,000 ($7/t) w-o-w.

Buyers’ market overview

• Hyundai Steel’s bids for Japanese scrap rebound: Hyundai Steel’s bids for Japanese scrap picked up sharply by JPY 2,500/t ($19/t) for H2 and by JPY 3,000/t ($22/t) for higher-grade scrap as against the last bids presented on 21 July. Bids for H2 scrap are now at JPY 42,500/t ($315), while those for HS and shindachibara are at JPY 48,000/t ($355) FOB. Hyundai Steel’s bids rebounded due to peak product season with mills having limited stocks in hand and recovery in Japanese scrap export prices after the Kanto tender.

• Vietnamese buyers likely to return to market: Considering the sudden fall in prices, Vietnam-based buyers may have booked a bulk cargo in the Kanto tender. However, no fresh offers were heard and while buyers are willing to pay around $390-395/t CFR levels for bulk H2, fresh deals are yet to conclude.
• Bangladeshi buyers cautious: In a recent deal around 30,000 t of US-origin mixed (HMS and shredded) bulk cargo was booked for September shipment last weekend at an average price of $445-450/t CFR Chittagong. However, not much buying interest was heard this week for bulk cargoes.

Tokyo Steel increases scrap procurement prices: Japan’s Tokyo Steel has raised its domestic scrap buy prices after continuous cuts over the last four months. The company increased bids by up to JPY 2,000/t ($15/t) for two of its plants. Post adjustment, bid prices for H2 scrap are at JPY 43,000/t ($318/t) delivered to the Utsunomiya works and Kyushu plant.

Outlook: Considering the recent bid from Hyundai Steel at a higher level, Japanese scrap prices are likely to rebound. Major buyers like Vietnam and Taiwan have accepted the price hike, although the market is eager to know how long prices will sustain.