Japan: Ferrous scrap export prices fall amid bid-offer disparities

The Japanese ferrous scrap (H2) export market witnessed a continuous decline in prices due to limited trade and reduced demand from major buyers like South Korean and Vietnamese mills. The bid-offer spread widened, leading to a decrease in Japanese H2 scrap prices to JPY 48,000/t ($340/t) FOB.

Despite a bearish outlook from scrap dealers, Japanese mills continue to purchase material at higher prices compared to the seaborne market, benefiting from the positive margins accruing from strong finished steel prices.

Some suppliers may try to push up sales ahead of the important upcoming Obon festive holidays, but prices are not expected to drop sharply because of the demand for finished steel.

Some Japanese sellers are unwilling to sell below JPY 50,000/t($358/t) FOB as domestic prices reach JPY 50,500-51,000/t($361-365/t) FAS.

Other market updates

South Korea

The South Korean import market remains muted, with major mills skipping tenders and no significant bids or offers were heard on South Korea CFR basis. Demand for deep-sea cargoes is also muted in South Korea, potentially influenced by the summer vacation period.

POSCO offered a bid of JPY 55,500/t ($397/t) CFR for Japanese shredded scrap, a price that is unchanged from previous levels. The shipment deadline is 31 August and either Gwangyang or Pohang can be chosen as the landing port. Freight rates from Tokyo Bay are about JPY 3,000/t($21/t). So, the FOB price comes to around JPY 52,500/t($376/t).

This week, major ports across the country reported a mere 2,150 tonnes (t) of new arrivals, marking the lowest figure since 2019. This decline in import volume is attributed to the current supply and demand situation of steelmakers.

Vietnam

Vietnam buyers indicated bids at $360-$370/t CFR Vietnam for H2 scrap, while offers were at $385-$390/t CFR Vietnam. However, no deals were reported, indicating a lack of demand amid a challenging market situation in Vietnam.

• Meanwhile, Tokyo Steel Manufacturing, a prominent Japanese steelmaker, plans to shift to round-the-clock operations at all electric-furnace facilities by the end of the decade. The company aims to harness solar power and other renewable sources to optimize energy consumption and lower costs, as electric arc furnaces consume significant energy, especially during daytime hours when electricity rates are higher.
  
  

Outlook

The continued lack of active interest from major buyers in South Korea and Vietnam is likely to put downward pressure on export prices. However, the positive margins experienced by Japanese mills from strong finished steel prices may provide some support and prevent sharp drops in scrap prices. Market participants should closely monitor trade activities during the Obon holidays, as it may influence short-term price movements. Furthermore, the low import volume reported in South Korea and the challenging market situation in Vietnam are also contributing to the cautious sentiment.