Japan: Scrap export offers further down amid absence of firm bids, currency depreciation

The Japanese scrap export market slowed down, owing to absence of firm bids from overseas buyers. However, offers continued to decline further to four-month lows. In the absence of overseas bids, major mills are likely to sell their material in the domestic market. SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 48,500/t ($358/t) FOB, down JPY 2,000/t ($14/t) w-o-w.

Also, the currency depreciation has impacted Japanese scrap prices. The Japanese yen (JPY) has depreciated to 135 to the dollar against the 130-levels seen early this month. Additionally, major South Korean mills have lowered domestic scrap purchase prices for the sequential month.

Buyers' market overview

• South Korean mills bid for domestic material: South Korea's major mills have not placed bids for Japanese scrap for yet another week. However, mills continued to lower domestic material purchase prices. The country's major steelmakers, POSCO, Hyundai Steel, SeAH Besteel and Dongkuk Steel, have cut domestic scrap purchase prices, as per Steel Daily. The companies slashed purchase prices of all grades of scrap by up to KRW 10,000-30,000/t ($12-23/t).
  
  
• Vietnam trade limited despite low offers: Imported bulk Japanese H2 scrap offers have dropped to $400/t CFR Vietnam levels, down by further $5/t as compared to Monday. Despite the low offers, steel mills and buyers were mostly absent from booking any cargo from Japanese sources. Sluggish demand from domestic and overseas end-users for finished and semi-finished steel slowed down scrap trade activities.
  
  
• Bangladesh buyers stay away from Japanese market: Bangladesh-based major mills have actively procured US-origin bulk cargoes, considering their cost competitiveness. Buyers believe that Japanese material is still out of reach due the disparity in bids and offers.
  
  

Japan's domestic market overview

• Tokyo Steel lowers domestic scrap purchase price: Tokyo Steel, Japan's largest EAF steelmaker, has lowered scrap purchase prices for the fourth time this week. The company has slashed bids by up to JPY 2,000/t ($14/t). After the fourth revision, bid prices for H2 scrap are at JPY 53,000/t ($393/t) delivered to Tahara, while prices for other factories remain unchanged. Notably, purchase prices for the Utsunomiya plant came down by around JPY 6,500/t in total during June 2022.
  
  

• Ferrous scrap export shipments fall over 15% in May: Japan, a prominent ferrous scrap exporter globally, reported a 17% fall in scrap exports at 0.54 million tonnes in May, 2022, as against 0.65 mnt in April, as per customs data maintained with SteelMint. Higher prices kept demand for Japanese scrap on the lower side for key buyers. However, on a y-o-y basis, exports dropped 21% from 0.68 mnt in May, 2021.
  
  

Outlook: Japanese scrap export offers may fall further due to dull demand from domestic and overseas markets. However, as the global market rebounds this week buyers from South Korea and Vietnam are likely to return to inquire about Japanese material.