Japan: Scrap export market subdued on lower bids, holidays

Japanese scrap export prices have been in a continuous downtrend since end-Oct'21. The inconclusive Kanto scrap monthly export tender on bid-offer disparities has continued to weaken bids from key buyers like South Korea and Vietnam. Also with the ongoing New Year holidays, both suppliers and buyers have kept away from the market.

SteelMint's price assessment for Japanese H2 scrap stands at JPY 47,000/tonne ($408/t) FOB basis, down by JPY 1,000/t w-o-w.

Import markets' scenario -

• Prices in Vietnam range-bound: Imported Japanese scrap offers into Vietnam for bulk H2 grade were quoted at $480/t CFR levels. Prices remained unchanged against those reported on Monday, 27 Dec'21. Simultaneously, bids from buyers went down to a low level, which are not viable for suppliers. Also, there has been a rise in Covid-19 cases in the country which slowed down sentiments. Yesterday, Vietnam reported 17,000 new Covid cases, of which the highest were recorded in the capital city, Hanoi.
  
  
• South Korean buyers quiet: Major South Korean mills - POSCO, Hyundai Steel and Dongkuk Steel were quiet in bidding this week. Also, the planned maintenance at major mills during the winter holidays has slowed down buying interest.
  
  
• Bangladesh market extends silence: Demand for steel has turned weak as construction activities typically slow down in the winter months. The prevailing bearish sentiments pulled back mills from booking any fresh cargoes.
  
  
• Bid-offer disparities in Chinese market: Chinese buyers have continued to bid low for imported Japanese HRS 101 grade scrap. Thus, the bid-offer disparity has kept trading muted. Bids are hovering around $500/t CFR levels against the price indications from suppliers at $525/t CFR.
  
  

Japanese scrap exports fall 6% m-o-m in Nov'21: Japan has recorded 0.46 million tonnes (mn t) of overseas sales of the material in Nov'21 as against 0.49 mn t in Oct'21, showing a 6% m-o-m drop, as per customs data maintained with SteelMint.

Japan's domestic scrap prices continue to remain high: Japan's Tokyo Steel hasn't made any price adjustment for domestic scrap purchases this week, due to slow consumption during the winter holidays. The last revision was effective from 24 Dec'21. Post-revision, the company's bid price for H2 scrap stands at JPY 53,500/t ($468/t) delivered to the Tahara and Utsunomiya plants, while prices for the other plants remain unchanged.

Outlook:
Latest data shows that the output of cars and other motor vehicles in Japan has risen by 43% m-o-m in Nov'21. With increase in auto production, domestic scrap generation is likely to increase, easing its availability.