Japan: H2 scrap export offers see further drop of $11/t w-o-w

Japanese H2 scrap export offers continued their downward trend this week, a decline that has persisted since mid-July due to weak demand from major import markets. However, a potential rebound is expected from Vietnam as buyers return to the seaborne market, spurred by restocking needs.

BigMint's latest assessment of Japanese H2 scrap export offers stood at JPY 40,500/tonne (t) ($285/t) FOB Tokyo Bay, down by JPY 1,500/t ($11/t) compared to JPY 42,000/t ($295/t) FOB in the previous week.

The Japanese domestic market also witnessed a downward trend. EAF manufacturers in both the Kanto and Osaka regions reduced scrap purchase prices, with H2 prices falling below JPY 40,000/t ($281/t) in Kanto and dropping to JPY 41,000/t ($288/t) in Osaka, driven by weak export demand and a strong JPY.

Additionally, Tokyo Steel announced its eighth consecutive cut in domestic scrap procurement prices today, reducing rates by up to JPY 1,500/t ($10/t), effective 21 Sep'24. The total decline for Sep'24 now stands at JPY 5,000-6,000/t ($35-42/t), with H2 prices ranging within JPY 39,000-41,000/t ($273-287/t) across plants. The ongoing price reductions can be attributed to high inventory levels and weak demand.

Other market updates

Vietnam: Vietnamese mills returned to the seaborne market and showed active interest in Japanese scrap, owing to tight domestic scrap supply after recent typhoon damage. Japanese H2 scrap offers to Vietnam dropped by $15-17/t to $330-340/t CFR, reaching competitive levels with Australian-origin scrap, though buyers aimed for prices below $320/t. The narrowing bid-offer spread and weakening Japanese prices increased the likelihood of deals being struck, as Vietnamese mills sought to replenish scrap stocks amid increasing domestic demand.

Taiwan: Taiwanese mills were uncertain about market conditions after returning from holidays and, thus, adopted a cautious approach to new purchases. Although H1/H2 50:50 scrap offers dropped to $320/t CFR, buying interest was observed to be nil.

Feng Hsin Steel, Taiwan's largest rebar producer based in Taichung, announced a cut in its rebar list prices by TWD 400/t ($12.5/t) for the week of 16-20 September. The mini-mill's new offer for 13 mm dia rebar is TWD 18,100/t exw, the lowest since late December 2020. Additionally, its buying prices for local HMS 80:20 scrap were reduced to TWD 9,300/t, a 25-month low after a TWD 300/t decrease on 13 September.

As of 16 September, US-sourced HMS 80:20 scrap was priced at $320/t CFR Taiwan, down $5/t from the previous week, while Japan-origin H2 scrap dropped to $325/t CFR, a sharper decline of $10/t.

South Korea: South Korean mills were out of the seaborne market during the Chuseok holidays from 16 to 18 September, leading to no firm offers or bids heard throughout the week.

Outlook

The near-term outlook for Japanese H2 scrap export offers remains bearish. Weak export demand and high domestic inventory levels have led to a downward pressure on prices, resulting in a cautious market.