Japan: Scrap export prices fall to 2-month low as buyers continue to bid lower

Japanese scrap export prices continued to decline and have reached a two-month low. Meanwhile, no major deals were reported from the key buying countries such as Vietnam and South Korea, owing to the bid-offer disparities.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 49,000/t FOB ($432/t) basis, decreasing by JPY 1,000/t w-o-w.

Buying countries demand subdued

• South Korean mills lower bids for Japanese scrap: South Korean steel major Hyundai Steel trimmed bids for Japanese ferrous scrap recently by JPY 2,000-3,500/t ($18-31/t) for various grades compared to the last bid on 17 Nov'21. Bids are now at JPY 47,500/t ($420/t) FOB Japan for H2 grade, lower by JPY 2,000/t. It would be interesting to see if Japanese suppliers allocate volumes considering such a steep decline in bids. Following the Hyundai bid, SeAH Besteel has also lowered the bids for higher grade shindachi scrap to JPY 64,000/t CFR.
  
  

South Korean steel mills are changing the way in which they purchase ferrous scrap from Japan, as per a SteelDaily report. The Korean mills have started booking scrap at very low volumes and then adopting a wait-and-watch policy with the expectation that prices will come down before they resume trading in higher volumes of the material.

• Vietnam imported scrap trade remains quiet: Japanese scrap export offers to Vietnam are now at $490/t CFR levels, down by $5/t w-o-w. However, imported scrap trade remained absent in Vietnam. Discrepancies in bids and offers slowed down the trade. Due to Vietnam's negative domestic market sentiments, buyers and steelmakers are waiting for a clearer market picture.
  
  
• South Korean mills lower domestic scrap purchase prices: Hyundai Steel is set to lower its scrap purchase prices on 7 Dec'21 for the Incheon and Dangjin works by up to KRW 10,000/t ($8/t), as per SteelDaily. After the price cut, the purchase price of heavy scrap A would be at KRW 590,000/t ($501/t). For the Dangjin works, compression A and B prices have been reduced by KRW 15,000/t ($13/t). Pohang Iron and Steel company (POSCO) is also set to cut domestic scrap buy prices.
  
  

The company has cut scrap procurement prices by KRW 10,000-15,000/t ($8-13/t), with effect from 6 Dec'21

Japanese domestic scrap prices unmoved: Japan's Tokyo Steel kept its domestic scrap prices unchanged for the second successive week. The company continued to pay a bid price of JPY 55,000/t ($481/t) delivered to the Tahara plant located in central Japan and the Utsunomiya plant situated in the Kanto region.

Outlook

Japanese scrap suppliers are not likely to further lower scrap export prices and are waiting for the monthly Kanto Tetsugen scrap export tender which has been scheduled for next week, trade sources informed SteelMint.