Before going for golden week holidays spanning 29th Apr-06th May, Japanese scrap prices inched up on restocking activities witnessed from steel mills. Major EAF steelmakers and manufacturers raised bidding prices for domestic scrap by upto JPY 500/MT in order to secure inventory necessary for operations during long consecutive holidays.
Bids presented by most of the EAF steelmakers in Kanto region for special grade H2 were increased to JPY 32,500/MT (USD 296), FoB Japan following which prices in central and gulf regions also increased marginally. Presently H2 prices assessed at JPY 33,000/MT, FAS in Tokyo region.
Japanese scrap suppliers expect that prices are likely to stay firm as the buying interest from domestic buyers and South Korean importers is improving in the market.
Kanto Tetsugen scheduled to take place tomorrow – Japan’s monthly scrap export tender ‘Kanto Tetsugen’ is scheduled on tomorrow (10th May’18). This tender usually sets a benchmark in Japanese export market. Many of the market participants in Japan are waiting for the result of Kanto tender in order to decide price direction for domestic purchases and export market. It has attracted the attention because it can measure the flow of both export and domestic market in Japan.
According to sources, downtrend for H2 scrap observed since the last couple of weeks’, is likely to get proper direction in the Kanto tender for May’18. Interestingly, through this tender around 20,000 MT H2 gets auctioned every month and the bids are mainly presented for H2 scrap. The average bids for Apr’18 Kanto tendemonth.-month low and were recorded at JPY 32,979/MT FAS.
Few of the suppliers are apprehensive about H2 inventories and believe that its quality inspection will need to pay attention before exports to South Korea. H2 is primarily used to manufacture rebar for which demand remained lower than supply while demand for shipbuilding products like H shaped steel and plank remained strong this year.
Hyundai Steel likely to resume bids for Japanese scrap soon – Amid considerable steel inventories available in hand, South Korean leading EAF steelmaker Hyundai Steel suspended the bid for Japanese scrap for four weeks. Although Hyundai heard to have continued buying for high-grade scrap it hasn’t presented the bid for Japanese low and medium grade scrap almost for one month. According to sources, Hyundai is likely to return to the market soon. Few companies already have begun to offer scrap to Hyundai steel. However, everyone is doubtful if the interest for H2 will be recovered or not.
Hyundai Steel is the largest buyer of Japanese scrap and imports monthly around 200,000-250,000 MT. The market is quite optimistic as the large purchasing power of Hyundai steel will be back on track in the market. Hyundai steel’s import bidding is considered as the major indicator of scrap market direction in South East Asia.
South Korean steelmakers believe that the marginal jump in the scrap prices observed on restocking before holidays was the temporary phenomenon and further upside potential is limited.
Earlier to this, South Korea witnessed sharp fall in the demand during April’18. The stagnation of the South Korean economy (which accounts for almost 50% share in Japanese scrap exports) resulted in reducing real estate prices which have lowered the rebar demand in the country. Amid fall in rebar production on weakening construction activities, the demand for low-grade Japanese scrap plunged sharply in South Korea.
Japanese scrap prices were also influenced by USA tariffs announced, fluctuating exchange rate of Yen against USD and slowdown in purchase activities from Southeast Asian markets like Vietnam and Taiwan affecting the export market significantly.
– Inputs from SteelDaily and Iru Miru
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