Japan: Scrap export offers continue to decline, trade yet to pick up

Japanese scrap trade activities are mostly stable this week, with no deals heard to have been concluded. Moreover, Japanese domestic mills also lowered their scrap purchase prices. As the finished steel trade has yet to pick up, market sentiment has remained largely negative.

Despite the fall in prices, buyers are still pessimistic as mills have enough inventory in hand. Meanwhile, suppliers are not in a hurry to sell their material at a lower level. Prominent overseas scrap buyers like South Korean, Vietnamese, and Taiwanese mills have retreated to the sidelines and observing the market before bidding again.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 47,500/t ($328/t) FOB, down by JPY 500/t ($3/t) w-o-w.

Japan's crude steel output stood at around 7.3 million tonnes (mnt) in August 2022, down 8% as against 7.9 mnt in the same period last year. The fall in production is due to sluggish demand in Japan and overseas markets. However, m-o-m production volumes remained largely stable.

Negative buyers' sentiments

• South Korean mills postpone bids for Japanese scrap: Hyundai Steel and POSCO, two of South Korea's largest Japanese scrap buyers, have remained silent because no new bids for Japanese material have been received. Meanwhile, Hyundai Steel's Pohang plant is expected to resume scrap procurement activity from the second week of October which has been on a halt due to flooding. The steelmaker is taking delivery at its Dangjin works but suppliers are facing issues in delivering to the plant. Hence, amid concerns of a drop in their yard sales, suppliers are shifting to other steel producers.
  
  
• Bangladesh mills maintain silence: Bangladeshi mills have continued to maintain silence for Japanese bulk cargo bookings. However, indicators for imported scrap prices fell sharply by around $25-30/t w-o-w to $405-410/t CFR Chittagong.
  
  
• Vietnamese buyers remain on the sidelines: Indicative offers for Japanese bulk H2 scrap were heard at $380/t CFR, moving down by $15-20/t from Monday. However, mills continued to postpone bookings for imported scrap and remained on the sidelines.
  
  
• Tokyo Steel trims scrap buy prices by $3/t: Japan's major EAF steelmaker Tokyo Steel has trimmed scrap buying prices this week. The company lowered bids for H2 scrap by JPY 500/t ($3/t) for four of its plants except for Kyushu works. Post-revision, prices for H2 stand at JPY 49,000/t ($339/t) delivered to the Tahara plant, while those for Utsunomiya are JPY 50,000/t ($346/t).
  
  

Outlook: The Japanese scrap trade is yet to pick up, while market participants believe scrap offers may fall further on the back of limited demand from domestic and overseas buyers. Meanwhile, buyers may come back to the market after sentiments improve in the finished steel sector.