Japan: Currency depreciation continues to push up scrap export offers

Japanese scrap export offers have risen on higher bids amidst the currency depreciation. Prominent Japanese scrap buyers like South Korea's Hyundai Steel raised bid levels, while buyers from Vietnam, an emerging scrap procuring country, also increased their inquiries.

The depreciating Japanese currency allowed many buyers to raise their bids to take advantage of the weakened yen as the Russia-Ukraine war has now limited the potential scrap sourcing countries.

Currently, the JPY has hit a six-year low and is being traded at 122.6 levels against the dollar.

SteelMint's assessment for Japanese H2 scrap export price stands at JPY 66,000/t ($539/t) FOB, up by JPY 500/t ($4/t) w-o-w, with prices hovering at an all-time high.

Buyers' market overview

• Hyundai Steel further hikes bids for Japanese scrap: Hyundai Steel has raised bids further for Japanese scrap by JPY 1,000/t ($8/t) for H2 grade and JPY 1,500/t ($12/t) for Shindachi bara compared to 24 March, 2022. Bids for H2 scrap are now at JPY 66,000/t ($540/t), while those for Shindachi bara are at JPY 73,500/t ($601/t) FOB. Prices were adjusted due to the depreciation of the Japanese yen, although sources revealed that contract volumes are expected to be low. Within the month, South Korea continued to raise bids by over JPY 9,000/t m-o-m for Japanese H2 in particular.

  On the other hand, the company has booked Russian A3 scrap based on the bids presented earlier this week, at $620/t CFR. Sources revealed that Russian suppliers are actively exporting scrap due to the Russian ruble's (RUB's) devaluation against the dollar (USD) after the outbreak of war.
  
  

• Vietnam active in Japanese scrap inquiry: Vietnam returned to the Japanese market after staying away for almost a month, owing to the disparity in bids and offers. In a deal reported last week, around 5,000 t of bulk Japanese H2 have been booked at $610-615/t CFR levels. Offers remain firm at $630/t CFR Vietnam.
  
  
• Bangladesh likely to resume booking from Japan: South Asia's bulk scrap buyer Bangladesh was silent for the last few months, not showing interest in Japanese scrap. But, buyers continued to restock from other sources like Australia and the US, these being more cost-effective. But, now, with the Japanese suppliers quoting fresh offers at $680-685/t CFR levels, Bangladeshi buyers and steel mills are likely to resume bulk bookings from Japan soon, SteelMint understands.
  
  

Ferrous scrap exports rebound in Feb'22: Japan's ferrous scrap exports rebounded 72% m-o-m in February, 2022, as per customs data. The country exported almost 500,000 t of scrap in February as against 280,000 t in January. South Korea remained the largest importer with 280,000 t, followed by Vietnam with 116,000 t. On a y-o-y basis, exports by Japan dropped by 19% compared to 619,000 t in February 2021.

Tokyo Steel raises domestic scrap purchase prices by JPY 500/t ($4/t): Tokyo Steel raised scrap purchase prices for the fifth time this month. The company increased bids by $4/t for the Tahara and Utsunomiya plants. Post-revision, the company's bid price for H2 scrap stands at JPY 64,500/t ($521/t) delivered to Tahara and Utsunomiya, effective 30 March, 2022.

Outlook: Buyers anticipate that the weakened currency is likely to remain supportive for many shipments. However, despite the currency depreciation, Japanese scrap offers are still high.