Japan: Scrap export trade absent, inquiries limited ahead of holidays

Japan's scrap export trade remained absent for another week with limited inquiries received from overseas buyers. Additionally, domestic market sentiments were negative ahead of the Golden Week holidays.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 64,000/t ($492/t) FOB, down by JPY 2,000/t ($15/t) w-o-w.

Furthermore, the country's largest automobile manufacturer Toyota plans to produce about 200,000 units in 17 days of May, averaging 12,000 units/day, lower by about 8% than it had planned a month ago. It will produce around 260,000 units in 22 days of June, down 16% from the initial plan, sources said.

The company's further downward adjustment must have to do with the Covid-induced lockdown in Shanghai as it is the key dispatch base to deliver components to Japanese automakers.

Shanghai's lockdown is also forcing Japanese automakers to lower their output with stagnated auto exports to China.

Market overview-

• • South Korean buyers procure local scrap: A significant change in prices of imported and domestic scrap kept buyers cautious. Until last year, steelmakers largely relied on short-distance imported scrap but the mills have now adopted a different strategy and are procuring domestic material. Moreover, the purchase prices of major mills like POSCO, Hyundai Steel, and SeAH Besteel in April have declined sharply due to low demand amid factory accidents and repairs as well as slow construction activities. Hyundai Steel cut its scrap purchase prices on 27 April for the Pohang works, as per Steel Daily. The company slashed purchase prices of all grades of scrap by KRW 10,000/t ($8/t). Meanwhile, the company remained largely inactive in bidding for Japan-origin scrap.
    
    
  • Vietnam's imported scrap trade slows down: Southeast Asia's major Japanese scrap importer Vietnam has turned muted with no major bulk bookings and inquiries raised.
    Increased Covid cases and limited demand for finished and semi-finished steel are the major factors behind the slowdown in trade. However, fresh offers for Japanese bulk H2 material have come down further to $570/t CFR levels, down by $20/t w-o-w. Notably, prices have dropped around $60/t in the last one month.
    
    
  • Bangladesh market quiet ahead of holidays: Following global cues, imported scrap offers into Bangladesh have continued to move down. Buyers remained away from making bulk scrap purchases ahead of Eid holidays. However, deals in containers have continued to take place. Price indications for Japan-origin bulk H2 are at $630/t CFR Chittagong, a significant fall of $40/t w-o-w.
    
    
  • Japan's ferrous scrap exports rise in Mar'22: Japan's ferrous scrap exports rebounded 18% m-o-m in March 2022, as per SteelMint's customs data. The country exported almost 590,000 t of scrap as against 500,000 t in February. South Korea remained the largest importer with 330,000 t, followed by Vietnam with 103,000 t. On a y-o-y basis, exports by Japan dropped by 16% compared to 700,900 t in Mar'21.