Japan: H2 scrap export offers drop; Kanto export tender prices rise in dollar denomination

The Japanese Kanto H2 scrap export tender concluded today, showing a decline in bids in terms of JPY. However, bids in dollar terms rose by $3/t compared to July's tender. Approximately 15,000 tonnes (t) of scrap were likely to be booked by a Bangladeshi mill or Vietnamese importer at JPY 47,956/t ($326/t) FAS, reflecting a decrease of JPY 4,212/t ($27/t) from July's price of JPY 52,168/t ($323/t).

Out of 16 bids from 15 companies, totaling 110,900 t, only one bid for 15,000 t was successful. The bid price aligned with Kanto's purchase price of JPY 46,500 to JPY 48,000/t and exceeded the Gulf Coast price.

Additionally, Japanese H2 scrap export offers have continued their downward trend for the fourth consecutive week. BigMint's weekly H2 scrap export offers were assessed at JPY 47,500/t ($323/t) FOB Tokyo Bay, down by JPY 1,400/t ($10/t) from JPY 48,900/t ($333/t) FOB the previous week. This decline is largely due to volatility in the Japanese currency and a lack of buyer interest during the holiday season.

Moreover, Tokyo Steel recently announced a reduction in its scrap procurement prices across all grades, effective from 6 August, 2024. The company lowered prices by JPY 2,000/t ($14/t) at its Tahara plant, JPY 2,500/t ($17/t) at Utsunomiya, and JPY 1,000/t ($7/t) at Okayama, setting the new price at JPY 47,500/t ($325/t) across all plants.

Other market updates:

• Bangladesh: Bangladeshi buyers have been cautious due to ongoing political turmoil. However, with the formation of an interim government yesterday, the situation is beginning to stabilise. Consequently, today's Kanto tender was awarded to a Bangladeshi mill. According to market reports, buyers have resumed bookings, with some trades concluded from Australia, the US, Chile, and New Zealand.
  
  
• Vietnam: Vietnamese buyers have shown limited interest in Japanese scrap due to a significant bid-offer disparity. Instead, they are opting for scrap from Hong Kong, South Korea, and Russia, which are more cost-effective than Japanese options. Additionally, only a few Japanese suppliers have been active recently, likely due to the upcoming summer holidays and expectations of further recovery in the JPY. Offers for Japanese H2 scrap were assessed at $365-370/t CFR Vietnam, while buyers' bids were around $360/t CFR.
  
  
• South Korea: South Korean steel mills have shown limited interest in Japanese scrap, focusing instead on selling billets in the seaborne market. This week, the combined ferrous scrap inventory of eight major South Korean steel mills reached 695,000 t, marking an 11% decline from the previous week's 785,000 t. This is the first time since mid-January that inventory levels have fallen below 700,000 t. The decline in inventory is notable across both the southern and central regions, likely due to seasonal factors like the hot summer, factory shutdowns, and reduced production and deliveries. Some steelmakers are attempting to secure supplies through special and contract purchases, though it remains uncertain whether inventory levels will rise following this one-time price adjustment.
  
  
• Taiwan: The Taiwanese scrap market has seen a notable decline in import prices, with sellers accepting lower deal levels of $343-345/t CFR Taiwan amid weaker bids. Offers for US-origin scrap were lower at $346-350/t CFR Taiwan, compared to $349-362/t the previous week. The market is under pressure from limited bids and competition from South Korean billets, which are perceived as more cost-effective. As a result, demand for Japanese scrap in Taiwan is currently subdued, with buyers focusing on cheaper alternatives. Additionally, Feng Hsin Steel, Taiwan's largest rebar producer based in Taichung, has decided to cut its rebar list prices and procurement prices for local scrap for transactions over 5-9 August. The mini-mill is offering its 13mm diameter rebar at TWD 18,900/t ($578/t) ex-works, down TWD 400/t from the previous week and the lowest since mid-June 2023. The buying price of local HMS 80:20 scrap has been lowered to TWD 10,200/t, down TWD 300/t after holding steady at TWD 10,500/t for two months.
  
  

Outlook:

Japanese H2 scrap export offers are expected to decline further due to currency fluctuations, the upcoming holiday season, and limited inquiries from key importing nations. The July shipment of 14,000 t is set for 20 to 30 August 2024, with the next bid scheduled on 11 September 2024.