Japanese scrap export prices sink to 3-month low on bearish steel market sentiments

The Japanese scrap market remains less active than usual as overseas buyers are hesitating to book fresh offers. Despite the continuous decline in scrap export offers after the Kanto tender, steelmakers kept away from the market due to bearish finished steel sentiments.

SteelMint’s assessment for Japanese H2 scrap export prices stands at JPY 43,000-44,000/t ($307-314/t) FOB, decreasing significantly by JPY 4,000-5,000/t ($28-35/t) w-o-w. Prices have hit the lowest level in three months. 

Other overseas buyers such as South Korea are largely absent in the market. Major mills like Hyundai Steel and POSCO keep postponing their bids for Japanese material.

Buyers’ market dull

• South Korean mills opt to wait and watch: South Korean mills are cautious and have opted to wait and watch. Piling up of inventory in a dull finished steel market slowed down trades. Moreover, major steel mills will reduce their scrap buy prices by up to KRW 20,000/t ($15/t). Hyundai Steel will cut prices by KRW 10,000/t ($7/t) from 18 November for its Incheon and Dangjin works. Dongkuk Steel (Incheon works) and SeAh Besteel will cut prices by KRW 10,000/t, and KRW 15,000/t($11/t) respectively, from 19 November. Daehan, YK, and Korea Steel will reduce scrap buy prices by 20,000/t ($15/t) from the same day.
• Vietnam’s imported scrap market subdued: Vietnam, another prominent Japanese scrap buyer, saw market sentiments remaining subdued. Imported scrap offers are heard at $360-370/t CFR, down $10/t w-o-w. The domestic steel market was weak but mills will sustain losses if they export, which leaves them with no other option than reducing production.
• Tokyo Steel trims scrap buy prices by $8/t: Japan’s major EAF steelmaker, Tokyo Steel, has decreased scrap purchase prices twice this week. As part of the second revision, the company slashed H2 grade bids by JPY 1,000/t ($8/t) and prices of H2 scrap stand at JPY 47,000/t ($337/t) delivered to the Tahara works and JPY 47,500/t ($340/t) to the Utsunomiya plant.

Outlook: Japanese scrap prices are likely to fall further as buyers are resisting fresh bookings. However, suppliers expect that the price downtrend will be a temporary phenomenon.