Japan: Scrap export prices drop on weak demand

Export prices for H2 scrap in Japan have been consistently decreasing since the Golden Week, but there has been some market stability that has mitigated the extent of decline.

The Kanto scrap export tender for May 2023 in Japan concluded recently, with a notable decrease in bid prices. Compared to bids received in the April tender, prices dropped significantly by JPY 4,383/t ($32/t).

Additionally, the recent bid presented by Hyundai Steel for Japanese scrap has come down, while other buyers like Vietnam and Bangladesh remains quiet.

Tokyo Steel has reduced ferrous scrap procurement prices by JPY 500/t ($4/t) for the Nayoga plant due to sluggish steel demand. The revised H2 scrap prices delivered to Nayoga are JPY 46,500/t ($341/t). Effective from May 19, prices for Tahara remain at JPY 47,500/t ($349/t), while prices remain unchanged for Utsunomiya and Okayama at JPY 47,000/t ($345/t).

SteelMint's assessment for Japanese H2 scrap stands at JPY 46,500/t FOB, down JPY 500/t w-o-w on limited trade.

According to a Japanese trader source, the scrap market is currently stable. However, it is challenging to determine if the market has reached its lowest point due to relatively unchanged steel demand. Domestic demand in Japan is also weak, but scrap supply to mills remains steady, with Japanese mills purchasing at higher prices compared to international markets.

Buyers bid lower

South Korea: Hyundai Steel has reduced its bid prices for imported Japanese scrap, marking the sixth consecutive price cut since March. Bids for H2 and HS scrap have been decreased by JPY 500/t ($4/t) to JPY 45,800/t ($336/t) and JPY 49,800/t ($366/t) FOB, respectively. In addition, bids for shredded now stand at JPY 48,300/t ($355/t) FOB, a decrease of JPY 1,000/t ($7/t).

Additionally, after Hyundai lowered its bid level by Yen 500/t w-o-w, it was heard that Japanese suppliers and traders were opposing additional price cuts.

Vietnam: The imported scrap market in Vietnam has experienced a relatively quiet week, resulting in a slight decline in prices. Trade activities have remained sluggish following the Kanto tender. However, a recent deal from the tender that concluded on May 10 involved the booking of approximately 5,500 t of Japanese H2 material. The cargo was secured at an approximate price of JPY 46,030/t FAS.

However, domestic scrap prices in Vietnam rose due to tight supply. Vietnamese mills resumed purchases of seaborne scrap due to limited supply in the domestic market.

Outlook

In the near term, there is an expectation of price correction for Japanese material. This indicates a potential decrease in prices. It is also anticipated that demand may recover gradually. Furthermore, buyers are actively seeking discounts in order to procure inventory before the rainy season.