Japan: Ferrous scrap export prices show uptrend w-o-w following Kanto tender

Export prices of H2 scrap in Japan saw an increase w-o-w, fuelled by the improved sentiment following the Kanto Tetsugen tender. Limited shipments have been observed due to sluggish demand in key export destinations such as Vietnam and South Korea.

Tokyo Steel in Japan raised its domestic procurement prices for ferrous scrap by JPY 1,000/t ($7/t) for the Tahara plant and JPY 1,500/t ($11/t) for the Okayama plant, effective from 17 June 2023. Prices for the Utsunomiya plant remained unchanged. Following the revision, H2 scrap prices delivered to all three plants now stand at JPY 48,500/t ($344/t).

Some electric furnace manufacturers in the Osaka steel scrap market raised bid prices by JPY 1,000-1,500/t, creating a sense of price ceiling. Weak demand for steel materials limited the price increase, while export negotiations to Asian countries were not favourable. Overall, supply and demand are balanced, but future market growth expectations are weak, leading to a wait-and-watch approach among manufacturers.

SteelMint's assessment for Japanese H2 scrap stands at JPY 49,500/t($351/t) FOB, up JPY 1,000/t($7/t) w-o-w on limited trade.

Other market updates

South Korea

The South Korean market remained weak as mills reduced production and were inactive in the seaborne market. Additionally, domestic scrap generation is also slowing down, contributing to the overall stagnant situation.

In a recent development, Hyundai Steel raised bid prices for imported Japanese scrap, marking the first increase after six consecutive price cuts since 18 March 2023. Bids for H2 and HS scrap rose by JPY 2,400/t ($17/t) and JPY 3,200/t ($23/t), while shredded grades saw a JPY 3,700/t ($26/t) hike and were at JPY 52,000/t ($370/t), all on FOB basis.

The current market is engaged in a battle between sellers who have limited inventory and mills that are reducing production, creating a challenging and competitive environment.

Vietnam

Vietnamese imported ferrous scrap prices saw a modest uptick this week, influenced by the rise in Japanese Kanto scrap export tender bid prices. Nevertheless, subdued buying interest persisted in Vietnam due to sluggish demand in the longs sector, primarily impacted by sluggish construction activity in the country.

Vietnam's scrap demand remained weak, particularly in the northern region, where production was reduced by approximately 50-60% due to power shortages.

Japanese H2 bulk scrap offers in Vietnam reached $390-395/t CFR, marking a substantial increase of $25-30/t w-o-w.

However, Vietnamese mills struggled to match these high prices due to limited scrap generation in Japan and sellers' reluctance to provide any discounts.

Outlook

Buyers anticipate a price correction for Japanese scrap ahead of the rainy season, but suppliers from this country are expected to hold offers firm due to strong domestic demand. Meanwhile, the Vietnamese imported ferrous scrap market and the South Korean market may face challenges and remain slow in the near term, with production cuts impacting activity.