Japan: H2 scrap export offers drop further by JPY 500/t ($3/t) w-o-w

This week, Japanese H2 scrap export offers experienced a downtrend for the fourth consecutive week due to a wait-and-see approach from both buyers and sellers. Notably, while the export offers decreased in JPY terms, they edged up slightly in US dollar denomination. Today, 1 USD was equivalent to 146.05 JPY, compared to approximately 147.8 JPY last week.

As a result, market remained quiet with participants merely watching the fluctuations in exchange rate and the falling seaborne market without making any solid offers or bids. In the near term, most market participants were downbeat, anticipating losses, while shippers are holding back on making offers to avoid potential losses.

Additionally, the largest electric arc furnace (EAF) steel producer, Tokyo Steel, decided to lower its domestic ferrous scrap procurement prices, effective 23 August, 2024. The company has lowered prices by JPY 1,000/t ($7/t) at its Tahara, Okayama and Utsunomiya plants, setting the new price for H2 at JPY 46,500/t ($319/t). The company decided to lower bid prices for all grades of scrap at all its electric arc furnace steel plants due to the significant appreciation of the JPY against the US dollar.

Thus, BigMint's latest assessment of Japanese H2 scrap export offers dropped by JPY 500/t ($3/t) to JPY 46,500/t ($319/t) FOB Tokyo Bay in comparison with JPY 47,000/t ($318/t) FOB in the previous week. Domestic FAS collection prices for H2 grade remained steady at JPY 45,000-46,500/t w-o-w. However, sources expect that prices will drop, following Tokyo Steel's announcement of further price cuts for scrap inflows.

Other market updates

Vietnam: Vietnamese mills did not place any bids for three weeks for Japanese scrap. Scrap prices continued to drop, and the downstream market was quite poor. Despite recent market adjustments, low steel demand persisted because cheaper billets were being diverted to the seaborne market. This competition with billets further depressed scrap prices. Offers for H2 scrap from Japan stood at $360-370/t CFR Vietnam, while buyers asking prices were at $355/t. Additionally, domestic scrap prices remained stable as they were already below seaborne levels, and the downstream markets showed mixed conditions.

South Korea: In South Korea, domestic scrap prices strengthened over the week as mills prioritised securing long-term contracts for scrap, while local yards reduced their scrap collection rates. The market remained subdued, with major mills primarily sourcing Japanese scrap through long-term agreements. Prices remained stable as other markets did not show any improvement. Moreover, attempts to export billets had little effect on the market. Additionally, POSCO reported a rise in import volumes since mid-July, reporting a total of 21,500 t. It comprised 15,500 t at the Pohang facility and 6,000 t at Gwangyang.

Prices of H2-equivalent Light A grade scrap remained steady at KRW 380,000-395,000/t ($284-$295/t) and Heavy A grade held steady at KRW 425,000/t.

Taiwan: The Taiwanese imported scrap prices experienced a significant decline w-o-w. However, mills displayed limited interest in the market, resulting in fewer bids, reduced buying activity, and downward pressure on prices. Offers for Japanese H1/H2 bulk scrap were around $352/t CFR, slightly lower on the week amid currency fluctuations, but no response was heard from mills.

Additionally, Feng Hsin Steel, Taiwan's largest rebar producer headquartered in Taichung in central Taiwan, on Monday decided to cut its rebar list prices and procurement prices of local scrap for transactions over 19-23 August, according to a company official. The mini mill is offering its 13mm dia rebar at TWD 18,500/t ($580/t) EXW, falling by TWD 400/t on week and marking the lowest since mid-February 2021, and its buying price of local HMS 1&2 80:20 scrap hit a two-year low of TWD 9,600/t, down by another TWD 300/t after the price cut of TWD 300/t . The price of US-sourced HMS 1&2 80:20 scrap came in at $340/t CFR Taiwan, slipping by another $5/t from the previous week. There was no quotation for the Japan-origin H2 scrap over the past week, a local market source said.