Japan: H2 scrap export offers rise $4/t amid currency depreciation, price hike by Tokyo Steel
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Japan's H2 scrap export offers rose by JPY 700/tonne (t) ($4/t) over the past week due to the depreciation of the JPY against the US dollar. However, demand from key importing nations remained subdued due to slowdowns in their domestic markets.
BigMint's weekly assessment shows that Japanese H2 scrap export offers are now at JPY 50,500/t ($315/t) FOB Tokyo Bay, up from JPY 49,800/t ($310/t) FOB the previous week.
The increase in export offers was also supported by a recent price hike from Tokyo Steel, Japan's largest electric arc furnace (EAF) steel producer. Tokyo Steel raised scrap procurement prices by JPY 1,000/t ($6/t) at its Tahara, Utsunomiya, and Nagoya plants. New prices for H2 scrap are JPY 52,000/t ($325/t) at the Tahara plant, JPY 51,000/t ($319/t) at the Nagoya plant, and JPY 52,500/t ($328/t) at Utsunomiya. However, prices at the Kansai plant were reduced by JPY 500/t ($3/t) to JPY 51,000/t ($319/t).
Notably, Utsunomiya's prices have been raised for the first time in a month and a half since May. The primary reason for the increase is the JPY's depreciation, as some plants have maintained steady prices or reduced them.
As a result, FAS collection prices in Tokyo Bay increased to JPY 50,000-51,500/t ($311-321/t) from the previous week's range of JPY 49,500-51,000/t ($308-318/t), following the Tokyo Steel price hike.
Other market updates
Vietnam: Vietnamese steel mills' interest in Japanese scrap remained subdued due to weak downstream demand, with most buyers staying on the sidelines in anticipation of further decline in seaborne offers. Domestically, prices for type 1 or H2 equivalent 3-6mm scrap have remained stable, ranging from VND 9,250-9,600/t ($363-377/t) in the northern region and VND 9,000-9,100/t in the southern region. However, downstream prices have also corrected. For example, Formosa Ha Tinh, a major Vietnamese steel producer, has reduced hot rolled coil (HRC) prices by $30/t m-o-m for August 2024 shipments.
South Korea: Demand for seaborne scrap in South Korea remained sluggish due to price cuts announced by major mills. Last week, steel giant POSCO showed interest in seaborne scraps, but this subsided as domestic scrap procurement prices fell. Notably, major mills Daehan Steel and YK Steel plan to reduce scrap prices by KRW 10,000 ($7/t) effective from 2 July.
This week, the combined ferrous scrap inventory of eight major South Korean steel manufacturers was approximately 788,000 t, a slight decrease from the previous week's 790,000 t. The demand for ferrous scrap is not expected to increase due to sluggish product sales and major maintenance during the off-season.
Taiwan: This week, Taiwan's imported scrap market saw stable prices following a slight increase last week. Demand for raw materials remained unimpressive due to a weak finished products sector. US-origin HMS (80:20) scrap in containers were heard to have been concluded at $345/t CFR Taiwan, with offers stable at around $350/t CFR. Despite weak long product sales in Taiwan due to rainy weather, scrap exporters maintained prices amid high freight rates.
Taiwanese importers were ready to buy Japanese bulk H1/H2 scrap at $356-358/t CFR, but no deals were disclosed. Feng Hsin Steel kept its rebar and domestic scrap prices unchanged, while import billet market activity remained low due to a bid-offer gap.
Outlook: Japanese H2 scrap export offers are expected to remain high, as the Japanese yen has reached its weakest level in three decades. This currency weakness is driving up offer prices despite sluggish buying interest from major import markets.
