Japan: H2 scrap export offers increase by $6/t w-o-w on supply tightness

This week, Japanese H2 scrap export offers saw an increase of around JPY 900/tonne (t) ($6/t) due to tight supply in the domestic market. However, demand from key importing markets remained muted.

The domestic supply tightness was caused by slow generation due to extreme heat and recyclers focused on fulfilling the previous month's Kanto tender volume of 25,000 t. Additionally, scrap procurement by Tokyo Steel's Tahara plant rose after it resumed operations, which had been halted due to ancillary equipment damage.

According to BigMint's latest assessment, Japanese H2 scrap export offers stand at JPY 51,400/t ($320/t) FOB Tokyo Bay, compared to JPY 50,500/t ($314/t) FOB in the previous week.

As per market insiders, scrap generation was slowing due to the onset of the summer season and the observance of heavy rains across the country.

Japanese ferrous scrap export volumes in May 2024 saw a rise of 11% m-o-m to 0.49 million tonnes (mnt) as compared to 0.44 mnt in April. However, imports dropped by 12% y-o-y from 0.56 mnt in May 2023.

For the first five months of this year, total scrap imports touched 2.4 mnt, marking a decline of 9% from 2.7 mnt imported during the same period in 2023.

Other market updates

Vietnam: Vietnamese steel mills showed little interest in procuring scrap from the seaborne market due to a subdued domestic market for both flat and long steels. Additionally, some steel mills have opted to purchase more billets instead of scrap, driven by a prolonged decline in billet prices in the region.

South Korea: Except for POSCO, South Korean steel mills showed little interest in seaborne scraps due to a slow domestic market. This week, the ferrous scrap inventory of eight major South Korean steel manufacturers increased by 5% to 825,000 t, up from 790,000 t in the previous week. This marks the first time since early May that inventory levels have surpassed 800,000 t, with increases noted in both the central and southern regions.

Taiwan: Taiwanese mills limited scrap purchases due to a muted rebar market during the summer slowdown. Offers for US-origin HMS (80:20) were heard at $345-360/t CFR Taiwan, with bids at $340-345/t CFR. Japanese bulk H1/H2 (50:50) scraps were offered at $359-360/t CFR Taiwan.

Notably, a deal for Japanese bulk H1/H2 (50:50) scrap was heard to have been concluded at $355/t CFR Taiwan, but most Taiwanese mills preferred US-origin containerized scrap due to cost competitiveness.

Outlook

Japanese export offers are expected to remain high due to the yen's devaluation, tight domestic market supply, and active inquiries from markets such as India and Bangladesh.