Japan: Ferrous scrap exports drop 13% m-o-m in Aug'24 due to weaker demand from key markets

In August 2024, Japan's ferrous scrap export market experienced a notable drop in terms of volume which fell by 13% m-o-m. The volume decreased from 0.55 million tonnes (mnt) in July to 0.48 mnt in August. Despite this m-o-m decline, Japan's scrap exports dropped 11% y-o-y, falling from 0.54 mnt in July 2023.

In the first eight months of the calendar year 2024 (8MCY'24), the trend revealed that the cumulative exports from January to August totalled around 4.09 mnt. It represents a 7% decline compared to the 4.41 mnt exported during the same months in 2023.

Japanese H2 scrap export offers decreased by JPY 4,095/t ($28/t) FOB m-o-m, reaching JPY 46,880/t ($321/t) FOB in August, down from JPY 50,975/t ($340/t) FOB in July.

Japan's H2 scrap export offers decreased due to weak global demand and competitive pricing from other countries. Multiple price cuts by Tokyo Steel, sluggish demand from traditional markets, and a strengthening Japanese currency weighed on prices. Additionally, Taiwanese and Vietnamese buyers are opting for cheaper alternatives further limiting Japan's competitiveness.

Lower scrap import volumes from Vietnam and Bangladesh contributed to the overall decline in total imports.

Country-wise exports break-down

Vietnam: Vietnam, is the leading importer of Japanese ferrous scrap comprising 35% of the total export volume from Japan in August 2024 with 0.17 mnt, despite a significant 26% m-o-m decrease from July's 0.23 mnt.

On a y-o-y basis, Japan's exports to Vietnam rose by 21% in August compared to 0.14 mnt in July 2023.

During 8MCY'24, scrap exports from Japan to Vietnam aggregated to around 1.65 mnt - marking a sharp increase of 65% y-o-y compared to 1 mnt seen in the same months of 2023.

According to BigMint's analysis, Vietnam's demand for Japanese H2 scrap remains muted due to rising freight rates and competition from cheaper alternatives, such as US-origin containerised scrap. Buyers are hesitant to commit, waiting for potential price drops in Japan.

South Korea: South Korean imports followed closely Vietnam, and stood at 0.15 mnt, a substantial 36% m-o-m rise from July's 0.11 mnt. On a y-o-y basis, Japan's exports fell by 17% in August 2024 compared to 0.18 mnt in the corresponding period of last year (CPLY).

According to market insiders, weak demand from mills in South Korea, driven by a sluggish construction sector and high inventory levels, has led buyers to prefer competitively priced domestic scrap over falling Japanese prices. Even with Japanese H2 offers dipping below local rates for the first time in 11 months, rising ferrous scrap inventory at 707,000 t reduces the need for imports, pushing buyers toward cheaper alternatives like Russian scrap.

During 8MCY'24, scrap exports to South Korea aggregated to around 1.05 mnt - marking a sharp decrease of 45% y-o-y compared to 1.9 mnt seen in the same months of 2023.

Bangladesh: Bangladesh emerged as the third-largest importer with 0.06 mnt of ferrous scrap in August, despite a 14% m-o-m decline from 0.07 mnt in July. However, the country saw a 14% y-o-y decrease from 0.07 mnt in August 2023.

During 8MCY'24, Japan's scrap exports to Bangladesh aggregated to around 0.34 mnt - marking a sharp increase of 17% y-o-y compared to 0.29 mnt seen in the same months of 2023.

Taiwan: Taiwan's ferrous scrap imports from Japan stood at 0.03 mnt, stable m-o-m. However, it fell by 63% y-o-y from 0.08 t in July 2023.

Market participants informed that Taiwanese mills gave preference for cheaper alternatives like US containerised scrap and competitive Chinese billets tend to decrease Taiwan's demand for Japanese scrap. Taiwanese mills are cautious about new purchases and focus on maintaining inventory levels.

During 8MCY'24, scrap exports to Taiwan aggregated to around 0.39 mnt - marking a sharp decrease of 39% y-o-y compared to 0.64 mnt seen in the same months of 2023.

Outlook: Japan's ferrous scrap export market is likely to face sustained pressure due to subdued global demand and rising competition from lower-cost alternatives in the domestic market of major buyers. Scrap importers are expected to remain cautious, prioritising local scrap and lower-priced imports, with interest in imported ferrous scrap procurement remaining notably dull. This could further weigh on export volumes and pricing. Moreover, reduced demand from key markets like Vietnam, where bad weather has disrupted activities, may aggravate challenges.