After successive price cuts since past three months, bids remained unchanged this week indicating Japanese scrap prices could have reached the temporary bottom.
South Korean leading EAF steelmaker – Hyundai Steel has kept the bids for Japanese scrap purchase unchanged on a weekly basis. The company has presented a bid of JPY 27,000/MT (USD 249) FOB Japan for H2 scrap today, same as its bid for last week. Bids for other grades also remained unchanged against last week, with H1 scrap at JPY 28,000/MT (USD 258), shredded at JPY 30,000/MT (USD 277), and Shin Daichibara (SD) at JPY 31,000/MT (USD 286) FOB Japan.
Japan’s Kanto monthly scrap export tender concluded earlier this week at an average price of JPY 28,050/MT, and these bids were higher than current market levels, putting pressure on any additional cuts in Hyundai’s purchase bids this week. Additionally, there were no changes in the purchase price of Tokyo Steel this week so far.
Since end of Mar’19, Hyundai Steel has lowered H2 scrap purchase bid by JPY 7000/MT (USD 65) in total, with 9 successive price cuts of JPY 500-1000/MT each witnessed in this period. The company plans to hold the prices at current bids’ level and watch the Japanese market situation unfold.
It was also reported that Hyundai Steel has planned to skip its long term contracts for Japanese scrap purchase and not renew them for the 3rd quarter, as the existing contracts have still not been exhausted in terms of scrap imported from Japan.
In 2018, the company imported an average of 70,000 MT of ferrous scrap per month from Japan as a part of these long term contracts. In Q1’19, this volume dropped to 60,000/MT per month and further to 40,000/MT per month in Q2’19.
Japanese steel scrap market is witnessing a severe oversupply situation with domestic demands turning very low. Moreover, the premium grade scrap products like Shindachi are facing a larger difference in supply-demand with a much higher stock surplus for these grades. Consequently, Japanese Steelmakers have made higher price cuts for SD and other higher grades as compared to H2 scrap.
Inputs~SteelDaily
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