Japan: H2 scrap export offers drop by $5/t w-o-w following recent price cut by Tokyo Steel

Japan's H2 scrap export offers experienced a weekly decline following Tokyo Steel's price reduction announcement, coupled with sluggish demand from key importing nations.

In the latest assessment by BigMint, Japanese H2 scrap export offers witnessed a drop of JPY 800/t ($5/t) to JPY 53,000/t ($362/t) FOB Tokyo Bay, compared to the previous week's JPY 53,800/t ($367/t) FOB.

The FAS H2 grade scrap collection prices in Kanto Bay experienced a decline, dropping to JPY 49,500-50,500/t ($338-345/t) for the week from JPY 51,500-52,500/t ($351-358/t) in the previous week.

On the domestic front, the iron scrap market in Japan saw a marginal decrease. The Japan Iron and Steel Association reported that the average price of furnace fuel in the three regions (H2) for the current week stands at JPY 48,700/t ($332/t), marking a decrease of JPY 400/t ($3/t) compared to the previous week. This marks the first decline in three months, dating back to November of the preceding year.

Breaking down regional prices, Kanto's price saw a decline to JPY 49,200/t ($336/t), down by JPY 1,800/t ($12/t) from the previous week. Conversely, Kansai's price increased by JPY 700/t ($5/t) to reach JPY 49,100/t. Chubu remained relatively stable, mirroring Jeonju at JPY 47,800/t ($326/t).

In the Nagoya region, ferrous scrap prices remained steady at JPY 37,500-38,000/t ($254-257/t) as market participants adopted a wait-and-see approach following Tokyo Steel's recent announcement of a JPY 2,000/t ($14/t) reduction in scrap procurement prices for the Utsunomiya plant. Despite this, EAF producers in the district to increase crude steel production, stable demand for raw materials is expected, prompting a focus on secure procurement.

Other market updates:

Vietnam: Vietnamese mills adopted a "wait-and-see" approach due to discrepancies between bids and offers following a recent reduction by Tokyo Steel and on approaching of Lunar New Year holidays. Despite a decline in offers by approximately $5/t w-o-w to $400/t CFR Vietnam, there has been no visible buying interest. Bids have consequently fallen to around $395-400/t CFR levels for H2 grade scrap.

A Japanese trader remarked, "Scrap demand in Vietnam is notably limited, and finding buyers has become challenging following Tokyo Steel's price cut. Despite a decrease in export offers of approximately $5/t and JPY 1,000-2,000/t in the domestic market."

Taiwan: Taiwanese mills displayed minimal interest in acquiring scrap from the seaborne market, as they already have ample stocks available for the upcoming Lunar New Year holidays. Offers for H1/H2 50:50 grade were noted at approximately $390/t CFR, while bids were lower at $375/t CFR levels.

According to a trader source, "Taiwanese mills are nearly inactive in anticipation of the Lunar New Year holidays and due to their abundant inventories."

South Korea: In South Korea, steel mills abstained from procuring scraps from the seaborne market as they found cost-effective alternatives within the domestic market. Despite ongoing price increases by steel mills, domestic scrap prices continued to be more affordable compared to offers for imported scrap.

Outlook

Japanese export offers are anticipated to experience ongoing pressure, given the muted demand from key importing nations as the Lunar New Year holidays approach, coupled with ample existing inventories.