Japan: H2 scrap export offers drop for third consecutive week on low demand

Japanese H2 scrap export offers declined for the third consecutive week due to a lack of strong demand from major importing countries, coupled with a price cut announcement from Tokyo Steel, the largest scrap consumer.

A trader commented, "The seaborne market is very quiet this week, with Vietnamese and Taiwanese market players not bidding. Compared to the last week, prices have dropped slightly, and it is currently a buyers' market as no one can sell anything."

According to BigMint's latest assessment of Japanese H2 scrap stood at JPY 50,300/tonne (t) ($323/t), down by JPY 400/t ($3/t) compared to JPY 50,700/t ($326/t) in the previous week.

Tokyo Steel, Japan's leading EAF steel producer, announced a reduction in domestic ferrous scrap prices by JPY 500/t ($3/t), effective from 6 June 2024. New prices of H2 scrap are JPY 51,000/t ($327/t) at both the Okayama and Kyushu plants and JPY 50,000/t ($320/t) at the Takamatsu plant. Consequently, the FAS collection prices in Tokyo Bay dropped to JPY 50,000-51,500/t ($322-331/t).

Additionally, in April 2024, Japan's ferrous scrap exports dropped by 8%, from 0.49 million tonnes (mnt) in March to 0.45 mnt similarly y-o-y, export volumes decreased by 17%, from 0.54 mnt in April 2023. Vietnam and South Korea were the top importers at 0.15 mnt and 0.14 mnt, respectively, followed by Taiwan and Malaysia at 0.06 mnt and 0.03 mnt.

Other market updates

Vietnam: Offers for H2 scrap from Japan were assessed at $370/t CFR Vietnam, while buyers' bids were noted at $365/t CFR. Due to this bid-offer disparity, buying interest from Vietnamese buyers remained subdued.

Vietnamese mills remained cautious, staying on the sidelines for imported scrap as they awaited clearer pricing signals amid ongoing uncertainties in the steel market.

Taiwan: Taiwanese mills continued to show disinterest in imported scraps due to frequent rainfalls, which have softened rebar demand from Taiwan's building contractors. Offers for H1/H2 50:50 scrap from Japan were heard at $358-360/t CFR Taiwan.

Notably, Feng Hsin Steel, Taiwan's largest rebar producer headquartered in Taichung in central Taiwan, has decided to cut its rebar list prices and procurement prices for local scrap by TWD 300/t ($9.3/t) each week for transactions over 3-7 June, a company official confirmed. With the latest adjustment, the mini-mill is offering its 13mm dia rebar at TWD 19,100/t ($604/t) EXW for business discussions till this Friday, while its buying price for local HMS 1&2 80:20 scrap reaches TWD 10,500/t, according to the official.

South Korea: Korean mills continued to remain on the sidelines due to sluggish demand for scrap in the domestic market and low production rates by major mills. Additionally, several steel mills have lowered scrap procurement prices, making domestic scrap prices more attractive compared to imports.

South Korean steel manufacturers have recently decided to reduce scrap procurement prices by KRW 10,000/t ($7/t). Korea Steel will implement this price cut starting on 5 June 2024, while Daehan Steel and YK Steel will follow suit on 8 June, 2024. Notably, these manufacturers, located in southern South Korea, made this decision following a drop in the rebar market.