Japan: Ferrous scrap export prices continue their downtrend amid weak buying sentiments

Japanese ferrous scrap (H2) export prices continued the declining trend. Prices dropped this week amid the absence of South Korean buyers. Moreover, other buyers adopted a wait-and-see approach on expectations of further downward corrections. On the other hand, sellers held back offers, resisting to sell at lower prices.

According to SteelMint's assessment, Japanese H2 scrap is now priced at JPY 49,000/t ($346/t) FOB, dropping by JPY 500/t ($4/t) w-o-w due to limited trade.

As per market participants, sentiments are still bearish with buyers not accepting floated offers.

Other market updates-

South Korea

The South Korean market is currently quiet, with two major mills already having executed their tenders last week and unlikely to return to purchase scrap this week. The seaborne market is weakening, leading mills to wait for better conditions. The domestic scrap flow to South Korean mills is moderate, reducing the urgency for quick procurement of H2 scrap from Japan.

Hyundai Steel reduced its purchase price by KRW 10,000/t ($8/t) for its Incheon plant, while Hwan Steel decreased prices by the same amount for all scrap grades. POSCO Steel will also cut prices for its Pohang and Gwangyang plants by KRW 5,000/t ($4/t).

Total steel scrap arrivals at major South Korean ports decreased by 18% or 13,000 t w-o-w. Imports have not surpassed 100,000 t since the third week of June, and steel scrap inventories have surpassed the 1 million-tonne mark, with an 80,000 t increase this week, the largest surge seen this year.

Vietnam

The Vietnamese imported scrap market continues to witness low buying interest, with mills refraining from purchasing imported material due to uncertain market conditions. Vietnamese mills are focusing on procuring scrap from the domestic market at competitive prices. Vietnamese buyers can only accept $380/t CFR Vietnam and below for H2 scrap, as the strengthening Japanese Yen (JPY) lent support to scrap export prices, making it unaffordable for buyers in Vietnam, Bangladesh-, and Taiwan.

Japan's ordinary steel demand has declined due to slower shipbuilding and construction activities. However, there is a forecasted increase in demand for Japanese steel products (both carbon and special steel) in the local and export markets, expected to rise by 0.9% y-o-y to reach 20.37 million tonnes in Q3. Out of this, 16.4 million tonnes will be attributed to ordinary steel, as reported by the Ministry of Economy, Trade, and Industry of Japan.

Outlook

The outlook for the Japanese scrap export market remains bearish due to dull buying activities, especially from Vietnam, South Korea and Bangladesh. Price and sentiment corrections depend on the buying activity from Turkiye. Turkish buyers are currently purchasing at comparatively lower prices, influencing other countries' buying sentiments.