Japan: H2 scrap export offers edge up by $2/t w-o-w following recent price hike by Tokyo Steel

Japanese H2 scrap export offers saw a slight increase of around JPY 300/tonne (t) ($2/t) despite a lack of buying interest from key importing markets like South Korea, Taiwan, and Vietnam, with offer levels remaining unchanged.

This increase could be attributed to the recent price hike by Tokyo Steel, a leading Japanese EAF steel producer. Following Tokyo Steel's price hike, FAS collection prices in Tokyo Bay rose slightly to a range of JPY 49,500-50,500/t ($311-318/t) from the previous week's range of JPY 49,000-50,000/t ($308-315/t).

Notably, Tokyo Steel increased scrap procurement prices by JPY 1,500/t ($9/t), effective 18 June 2024. As a result, the new price of H2 scrap is JPY 51,000/t ($323/t) at the Tahara plant and JPY 50,000/t ($317/t) at the Nagoya plant. Prices at the Utsunomiya and Okayama plants remain unchanged at JPY 51,500/t ($326/t) and JPY 50,000/t ($317/t), respectively.

Consequently, BigMint's weekly Japanese H2 scrap export offers stood at JPY 49,800/t ($313/t) FOB Tokyo Bay, up from JPY 49,500/t ($311/t) FOB in the previous week.

Other market updates

Vietnam: Vietnamese mills displayed limited interest in imported scrap due to weak domestic steel sales, attributed to the onset of the rainy season causing delays in local construction projects. Offers for H2 scrap from Japan remained steady at $365-370/t CFR Vietnam. However, buyers' bid were around $360/t CFR levels.

South Korea: South Korean steel mills expect POSCO did not show any interest in seaborne scraps due to accumulating inventories amidst weak sales despite production cuts. However, POSCO was heard bidding for Japanese HS scrap at JPY 58,000/t ($365/t) and shredded scrap at JPY 57,500/t ($362/t).

This week, the ferrous scrap inventory rose for the first time in six weeks since early May 2024. This change happened due to a production cut trend spread across the industry. The combined ferrous scrap inventory of eight major South Korean manufacturers was approximately 790,000 t leading to an increase of about 24,000 t which is a 3.1% rise compared to the previous week.

Taiwan: Offers for H1/H2 50:50 scrap from Japan stood at around $350-355/t CFR Taiwan, remaining range-bound compared to the last week. However, buying interest remained low due to high temperatures and frequent rainfalls in summer, which are undermining support for local steel prices.

Feng Hsin Steel, Taiwan's largest rebar producer headquartered in Taichung, has decided to roll over its rebar list prices and procurement prices for local scrap for transactions over 17-21 June as per official sources. As a result, for business negotiations until this Friday, the company's list price of 13mm diameter rebar remains unchanged at TWD 19,100/t ($590/t) exw, while it continues to pay TWD 10,500/t for local HMS (80:20) scrap. This marks the second consecutive week that Feng Hsin has kept these prices static.

Outlook

In the near future, Japanese H2 scrap export offers are expected to remain stable due to weak demand from key import markets. In Vietnam and Taiwan, adverse weather conditions and heavy rainfall have led to sluggish domestic steel sales, reducing the need for scrap. Additionally, cost-effective alternatives available locally will likely deter buyers from the seaborne market.