South Korea’s leading EAF steelmaker – Hyundai Steel has presented its bids for Japanese scrap after almost a month’s time. Hyundai Steel had suspended its bids for last four consecutive weeks amid considerable scrap inventories available in hand and slowdown in construction activities during golden week holidays in Japan. However, this week Hyundai has resumed the bids for scrap imports as its scrap inventories are lowering and the demand for finish steel is improving in the local market.
As per latest update received, Hyundai Steel has presented its bids for H2 scrap at JPY 33,000/MT (USD 302), FoB Japan for this week. The bids presented have lowered by JPY 500/MT than its last bids placed almost a month ago at JPY 33,500/MT, FoB on 13th Apr’18. It is estimated that Hyundai has placed these bids for total 120,000 MT scrap which is hard to consider as the ‘large’ as it is placed after a four weeks’ time but it looks considerable in volume on weekly premises.
Revised bids for medium grade scrap like HS stood at JPY 36,000/MT (USD 340) and for high-grade scrap Shindachi Daichibara (SB) bids presented at JPY 39,000/MT (USD 368) on FOB Japan basis respectively.
Usually, Hyundai presents its bids for imported Japanese scrap every week. However, sharply declining rebar demand on weakened construction activities in South Korea, long consecutive golden week holidays in Japan, cheaper availability of low and medium grade scrap from domestic markets and ample scrap inventories in hand have influenced Hyundai Steel’s buying interest for Japanese scrap for four weeks. As per sources, Hyundai Steel remained active in buying high-grade scrap however, no bids were presented for medium and low-grade scrap in last four weeks.
Hyundai Steel is the largest buyer of Japanese scrap and imports monthly around 200,000-250,000 MT. The market is now quite optimistic about a large purchasing power of Hyundai steel, which is backed on track. Hyundai steel’s import bidding is considered as the major indicator of the market direction in South East Asia. However, everyone is doubtful if the interest for H2 will be recovered or not.
Market participants pointed out that there is still a significant price gap of around JPY 1500/MT between the bid presented by Hyundai and the current price expectation levels for H2 from Japanese suppliers. Bids of Hyundai steel are equivalent to the bids placed by Dongkuk steel before Golden week holidays. Hyundai Steel could have also been trying to keep import prices bounded and looking for domestic scrap prices not to get influenced by increasing import prices as it believes that there is no reason for Japanese scrap prices to increase.
Japan’s monthly scrap export tender fetches bids up by USD 12/MT – Japan’s monthly ferrous scrap export tender – Kanto Tetsugen for May’18 has recorded increase of USD 12/MT M-o-M in its average bids indicating Japanese scrap prices to remain strong in the near term. The average bids for May’18 recorded at JPY 34,245/MT (USD 312), FAS which has increased by JPY 1266/MT (USD 12) on M-o-M basis as against the average bids fetched at JPY 32,979/MT (USD 301) in Apr’18. Bids recorded in Kanto tender pulled Japan’s domestic H2 scrap price assessment in the range of JPY 33,000-34,000/MT (USD 301-310) at Kanto region.
Following uptrend in the Japanese market, Hyundai Steel may increase its bids next week.
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