Japan: Ferrous scrap export offers edge up w-o-w amid currency fluctuation

This week, Japan's H2 scrap export offers edged up slightly reflecting the impact of Japanese yen (JPY) volatility. Demand from traditional import markets, particularly Bangladesh and South Korea, remained low. In contrast, Japanese offers to Vietnam and Taiwan were reportedly in the range of $330-$335/t FOB.

SteelMint's weekly assessment of Japan's H2 scrap export prices stood at JPY 49,000/t ($325/t) FOB Tokyo Bay, a slight increase of JPY 100/t from JPY 48,900/t ($324/t) in the previous week.

In the domestic market, Japanese steel scrap prices showed stability, with the average price holding at JPY 47,100/t, consistent with the previous week. The Kanto region saw a minor decline to JPY 49,000/t, down by JPY 200/t, while the Kansai and Central regions maintained unchanged rates at JPY 46,900/t and JPY 45,300/t, respectively.

Buyer side market updates-

Bangladesh: Despite active participation in the Kanto tender for the last few months, Bangladesh failed to bid successfully for the October Kanto tender. Bangladesh's ferrous scrap market faced challenges in acquiring material due to a currency crunch and delays in LC opening. Buyers are reluctant to secure larger volumes of bulk scrap. SteelMint's weekly assessment shows a marginal increase of $3/t in bulk H2 scrap reaching $408/t CFR Chattogram.

Vietnam: Vietnam's imported scrap prices held steady after a recent Kanto tender for 15,000 t of H2 scrap at Yen 50,286/t FAS to Vietnam mills. SteelMint's weekly assessment reports a marginal drop of $3/t in bulk H2 scrap, reaching $370/t CFR Hai Phong port. Despite consistent production and demand, the fourth quarter lacks improvement compared to previous years. A Vietnamese mill source anticipates a quiet first quarter of 2024 until after the Lunar New Year.

South Korea: The collective inventory of eight South Korean steel companies rose 6% to 1.01 mnt this week due to successive price cuts, prompting increased stockpiles. Major steelmakers in South Korea reduced scrap purchase prices by KRW 10,000/t on 16 and 20 November. Suppliers are boosting inventory in anticipation of further price drops. Stringent warehousing restrictions add to the challenges. The downward trend in scrap prices is expected to persist until year-end inventory clearance, reflecting a notable downturn in the steel market with frequent price cuts by manufacturers.

Taiwan:Taiwan's imported scrap prices rose for the third consecutive week, with containerized HMS (80:20) scrap of US origin reaching $362/t CFR Taiwan, up from $355-358/t CFR the previous week. Current offers for the same grade are at $370-375/t CFR, with expectations of further increases. Japanese H1/H2 mini-bulk scrap is available at around $380/t CFR, up by up to $10/t over the week. Domestic scrap purchasing prices increased by $9/t, leading to a corresponding rise in rebar offers by $9/t w-o-w due to higher production costs.

Outlook: Japan's H2 scrap export offers are likely to remain range-bound due to currency volatility over the next few weeks. Meanwhile, the domestic scrap market is expected to exhibit a steady price trend. Import markets such as Taiwan and Vietnam show relative activity, while South Korea and Bangladesh face challenges, including cheaper availability in the domestic market, bid-offer disparities, and LC-related issues, resulting in limited procurement of imported material.