Japan: Ferrous scrap export offers hit new high on higher bids

Japanese scrap export offers increased further, hitting a new all-time high since mid-2017, the period from which SteelMint has been maintaining the data. The prices have surged owing to limited scrap availability in Japan and improved demand. The main reason behind the continued price uptrend is a decline in shredded scrap generation due to lower automobile production amidst chip shortage. Toyota's production is expected to fall short by 0.5 million units to 8.5 mn units from the previous forecast of 9 mn units for the fiscal year ending Mar'22.

Meanwhile, increased domestic and overseas demand for high-grade material kept the prices higher.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 58,000/t FOB levels, further up by JPY 2,000/t w-o-w. Notably, the prices have increased by JPY 5,000/t from the beginning of Feb'22.

Additionally, after the Kanto tender, Japan's Kansai-Cheorwon scrap export tender for Feb'22 was concluded recently, with the loading period from 21-Feb to 31-Mar'22. The winning bid was awarded a total of 5,000 t of mainly Japanese H2 scrap at an average price of JPY 58,220/t ($503/t) FAS, the second-highest bid after JPY 66,300/t ($573) in Jun '18. Notably, bids in Kansai rose by $20/t as against the Kanto tender concluded last week.

Buyers' prices idea

• South Korea's major mills lift scrap purchase prices by up to $39/t: Hyundai Steel raised bids for Japanese scrap by JPY 3,500/t ($30/t) for H2 grade and by JPY 3,000/t ($26/t) for HS grade compared to the last bid on 10 Feb'22, sources informed SteelMint. Bids for H2 scrap are now at JPY 58,500/t ($507/t), while bids for HS scrap are at JPY 64,000/t ($555/t) FOB. Bids for Shindachi bara scrap and shredded material are at JPY 64,000/t ($555/t), up by JPY 4,500/t ($39/t) against last bid. Following the hike in bids, another major mill, Dongkuk Steel, also placed bids for Japanese H2 material at JPY 62,000/t CFR basis (JPY 59,000/t FOB) levels. However, the deal remained unconfirmed as negotiations were going on.
  
  
• South Korean mills raise bid prices for domestic scrap: The two major South Korean mills, Hyundai Steel and Dongkuk Steel, raised domestic scrap purchase prices effective 15 Feb'22, as per a SteelDaily report. Dongkuk's Pohang plant lifted prices by KRW 10,000/t ($8/t) for all grades. Hyundai Steel's Incheon and Dangjin factories increased prices by KRW 10,000/t ($8/t). However, for weight A and B, prices were raised by KRW 15,000/t ($13/t).
  
  
• Offers for Vietnam rise further: Another prominent Japanese scrap buyer, Vietnam, opted to wait and watch the price direction. The prices for H2 material increased to $550/t CFR levels post-the Kanto tender outcome, which concluded last week. Meanwhile, buyers are looking for other prospective scrap origin sources. In a recent deal heard, around 15,000 t of HMS 1&2 (80:20) from Australia was booked by a steel mill at $570-575/t CFR levels.
  
  
• Bangladesh buyers extend silence: Bangladesh-based Japanese scrap buyers extended their silence with no active bookings recorded over the last few months. Increased freight rates and disparity in bids and offers kept buyers away from the Japanese market. Indications for bulk Japanese H2 were heard at $580/t CFR Chittagong, while buyers booked cargoes from other origins like USA, the UK, and Australia.
  
  

Japanese domestic scrap prices also continue to rise: Tokyo Steel raised scrap buy prices by up to $17/t for the second time this month earlier in the week. Post-revision, the company's bid price for H2 scrap stands at JPY 57,000/t ($494/t) delivered to the Tahara and Utsunomiya plants, effective 15 Feb'22.

Prices in JPY
Source: Company Reports, Compiled by SteelMint

Outlook

Japanese scrap suppliers feel prices may increase further, due to increased demand and limited supply. The gap between export and domestic prices in the Kanto region has narrowed.