Japan: H2 scrap export offers drop by $8/t w-o-w following Tokyo Steel's price cut

This week, Japanese H2 scrap export offers saw a notable decline after Tokyo Steel announced a price cut at its Tahara plant. Tokyo Steel Manufacturing unexpectedly shut down its electric arc furnace at the Tahara plant due to damage to ancillary equipment. This incident preceded the reduction in bid prices for all grades of scrap at the Tahara facility.

As a result, BigMint's weekly Japanese H2 scrap export offers stood at JPY 50,700/tonne ($323/t) FOB Tokyo Bay, down by JPY 1,200/t ($8/t) from JPY 51,900/t ($331/t) FOB the previous week.

Additionally, in the Nagoya region, ferrous scrap prices were weakening, with H2 scrap prices hovering around JPY 36,000-37,000/t ($229-235/t). Tokyo Steel's Tahara plant recently reduced raw material purchase prices due to the suspension of steelmaking caused by equipment damage. The market decline is limited, with trends in electric furnaces being closely monitored. Additionally, export contracts remain scarce, and demand from Korean buyers for high-end varieties is low.

Considering the market conditions, FAS collection prices also decreased in Tokyo Bay following the Tokyo Steel price cut, with H2 grade declining from JPY 51,000-52,000/t ($324-331/t) on 27 May to JPY 50,000-51,500/t ($318-327/t) on 29 May.

Other market updates

Vietnam: Vietnamese buyers showed little interest even before Tokyo Steel's price cut announcement due to weak finished steel demand. Domestic scrap prices in Vietnam declined amid this low demand and strong competition faced by electric arc furnaces (EAFs) against blast furnaces (BFs). In northern Vietnam, Domestic Type 1 or H2-equivalent 3-6 mm scrap prices fell by VND 100/kg ($4/t) to VND 9,500-9,600/kg ($372-376/t), while southern prices for the same grade dropped to VND 8,350-8,650/kg($327-340/t).

As per a mill source, steel demand is still weak, and the rainy season is starting soon. Low iron and coke prices give blast furnaces a production cost advantage, so EAFs cannot compete, thus scrap demand is low.

Offers of H2 scrap from Japan to Vietnam dropped by $2-3/t to $372-375/t CFR, while buyers' bids were assessed at $365/t CFR Vietnam.

South Korea: South Korean mills continued to prefer domestic scrap over imported scrap due to its cost-effectiveness. The market is not expected to recover until the end of summer. H2-equivalent Light A grade scrap remained steady at KRW 395,000/t ($287/t), while Heavy A grade stayed at KRW 425,000/t ($).

This week, the combined ferrous scrap inventory of eight major South Korean steel mills reached 768,000 t, a 2% decrease from the previous week's 799,000 t. The inventory reduction was more pronounced in the central region compared to the south, where news of the price cut had been announced.

Taiwan: In Taiwan, buyers refrained from booking seaborne scraps due to limited demand amid a summer lull for rebar. Taiwanese mills are struggling with low support from rebar selling prices in the local market, leading to expectations of low scrap demand throughout the month.

Feng Hsin Steel, Taiwan's largest rebar producer, has decided to maintain its rebar list prices and procurement prices for local scrap for the third consecutive week to monitor market changes. The mini-mill continues to offer its 13mm dia rebar at TWD 19,400/t ($604/t) exw, unchanged since early May. Its buying price for local HMS 1&2 80:20 scrap also remains steady at TWD 10,800/t.