Japan: H2 scrap export offers drop by $3/t w-o-w

This week, export offers for Japanese H2 scrap witnessed a decline, mirroring Tokyo Steel's recent pricing adjustment. As a prominent EAF steel manufacturer in Japan, Tokyo Steel's decision to reduce prices has impacted domestic scrap prices. Furthermore, the depreciation of the JPY against the US dollar worsened the downturn in market sentiment.

According to BigMint's latest assessment, Japanese H2 scrap export offers stood at JPY 51,400/tonne (t) ($328/t) FOB Tokyo Bay, down JPY 400/t ($3/t) as against JPY 51,800/t ($331/t) FOB a week ago.

In the Kanto region, electric arc furnace steel manufacturers lowered their purchase price of steel scrap by JPY 1,000/t ($6/t). Tokyo Steel's Utsunomiya Plant, which is currently suspended, initiated a JPY 1,000/t ($6/t) reduction in purchase price starting 19 April. The rationale behind the price reduction is to prevent the accumulation of stockpiles at the the plant by limiting daily intakes. Consequently, other manufacturers followed suit by adjusting their prices, with decreases ranging from JPY 500-1,000/t ($3-6/t).

Meanwhile, ferrous scrap prices in Nagoya remained stable, with H2 grades priced at JPY 36,000-37,000/t ($230-236/t). The market remained quiet due to a limited number of port sources participating in export activities, attributed to the presence of cheaper Chinese billets in Asia. Despite robust crude steel production, particularly from special steel electric furnaces, there was a notable contrast with sluggish non-automotive production.

Updates of other markets

South Korea: Throughout the week, South Korean steel mills maintained a subdued stance amidst sluggish demand and ample inventories. Furthermore, reports indicated that a few mills had reduced their production rates. Moving forward, there is a bearish outlook on prices in the near term, attributed to the lack of recovery signals in construction markets.

The ferrous scrap inventory at eight South Korean steel mills witnessed a slight increase of 1% to 872,000 tonnes (t) this week in comparison with 862,000 t reported in the previous week. The rise was seen particularly in the southern region. Nevertheless, inventory levels remained slightly below the typical annual average. Despite this, there is no perceivable scarcity owing to the subdued state of the product market.

Vietnam: Vietnamese buyers had shown a moderate level of interest in Japanese scrap, even though it was priced higher compared to domestic alternatives. However, reports had indicated a scarcity of domestic scrap, leading buyers to proceed cautiously and consider larger purchases carefully. A deal of around 5,000 t of H2 scrap was heard to have been concluded at $370/t CFR Vietnam recently. Current offers for H2 scrap from Japan had been noted at $375-380/t CFR, while buyers had been submitting bids around $365-375/t.

In the domestic market, type 1 or H2 (3-6mm) equivalent scrap prices were assessed at VND 8,800-9,000/t ($347-355/t) in the southern region.

Taiwan: As per market participants, a few major EAF steelmakers in Taiwan are anticipated to reduce production starting from May coinciding with the commencement of electricity rationing for the summer season. This rationing is projected to last approximately six months, resulting in a production decrease of at least 20-25%, leading to a corresponding decline in scrap demand, the trader noted.

For instance, Feng Hsin Steel, Taiwan's largest rebar producer headquartered at Taichung in central Taiwan, has decided to roll over its rebar list prices and procurement prices for local scrap for transactions over 22-26 April in order to better monitor market changes.

Outlook

Japanese export offers are expected to exhibit volatility, primarily driven by the depreciation of the JPY against the US dollar and subdued demand from key importers such as South Korea and Taiwan.