Japan: H2 scrap export offers drop by over $10/t w-o-w amid weak demand, JPY recovers

This week, Japanese H2 scrap export offers experienced a significant drop of around JPY 1,700/tonne (t) due to subdued demand from key importing nations amid a slowdown in the domestic steel market and bid-offer gap, coupled with a sharp appreciation of the JPY against the US dollar.

According to BigMint's latest assessment, Japanese H2 scrap export offers are now at JPY 50,400/t ($322/t) FOB Tokyo Bay, down from JPY 52,100/t ($333/t) FOB seen in the previous week.

While the domestic supply of H2-grade steel in Japan is reported to be stable and adequate, Shindachi and HS grades are in short supply. This shortage is attributed to sluggish construction activity and reduced automobile production in the country.

On the other hand, Tokyo Steel - the largest EAF steel producer, had reduced scrap purchase prices by JPY 500/t ($3/t) at its Tahara, Utsunomiya, and Okayama plants on 13 July. The new prices for H2 scrap were at JPY 51,500/t ($323/t) at Tahara, JPY 50,500/t ($317/t) at Okayama, and JPY 52,000/t ($327/t) at Utsunomiya. This price cut follows the recent Kanto tender, where a weaker JPY resulted in a $4/t decrease in the dollar-converted value.

Moreover, Tokyo Steel's Kyushu Plant will reduce the price of all grades of steel scrap by JPY 500/t effective July 20, 2024.

Consequently, FAS collection prices dropped to JPY 50,000-51,000/t ($320-326/t) FOB Tokyo Bay, from JPY 50,500-51,500/t ($323-326/t) FOB in the previous week.

Other market updates

Vietnam: Offers for Japanese H2 scrap remained steady at $365-370/t CFR Vietnam. However, no bids were heard as market participants adopted a wait-and-see approach due to a slowdown in the domestic steel market. For instance, Vietnamese steel major Formosa Ha Tinh (FHS) has rolled over HRC prices m-o-m for September 2024 shipments. Following the revision, prices of HRC (SAE1006, skin pass) are at $570-580/t CIF Ho Chi Minh City (HCMC), while non-skin pass coils are priced at $560-572/t CIF, depending on the volumes booked. The company has adjusted prices due to current weak market conditions and a substantial decrease in the prices of imported Chinese HRCs.

Meanwhile, offers for Hong Kong-origin 50:50 grade scrap were heard at $370/t CFR, but market participants agreed on a tradable level of $355/t CFR Vietnam.

South Korea: In South Korea, there was no reported interest from sellers and buyers in the deep-sea market due to weak rebar demand and limited construction activities. However, South Korean steel giant POSCO has decided to increase ferrous scrap procurement prices for certain grades by KRW 10,000/t ($7/t), effective from 17 July 2024.

This week, the combined ferrous scrap inventory of eight major South Korean steel mills reached 815,000 t, a slight 1% increase from the previous week's 807,000 t.

Taiwan: Offers for H1/H2 50:50 scrap from Japan stood at $358-360/t CFR, remaining within the same range as last week. There was no interest in bulk cargoes, and no bids were reported as mills adopted a wait-and-see approach.