Japan: Scrap exports drop 22% in Jul'21 m-o-m on reduced China, Vietnam shipments

Japan, one of the leading ferrous scrap exporting countries, recorded 0.57 million tonnes (mn t) of overseas sales of the material in Jul'21 as against 0.73 mn t in Jun'21, down 22% m-o-m, as per customs data maintained with SteelMint. Exports decreased owing to limited buying from Vietnam and China. On the other hand, strong domestic demand and higher prices kept Japanese domestic scrap prices supported.

On a y-o-y basis, scrap exports registered a fall of 19% as compared to 0.70 mn t in Jul'20.

Highlights

• South Korea top importer: South Korea imported 0.30 mn t of ferrous scrap in Jul'21 as against 0.29 in Jun'21, slightly up by 3.4% m-o-m.
  
  
• Imports to Vietnam fall on worsening Covid restrictions: Vietnam mills imported 0.16 mn t of scrap in Jul'21 compared to 0.25 mn t in Jun'21, a sharp drop of 36% m-o-m. Market insiders kept away from trading owing to sluggish finished steel demand in the domestic market due to the worsening Covid situation and lockdown extensions in the earlier months.
  
  
• Scrap exports to China down on bid-offer disparities: China's ferrous scrap import volumes from Japan fell by 55% to 35,580 tonnes (t) in Jul'21 as against 79,697 t in Jun'21. Scrap imports into China declined due to bid-offer disparities which deterred Chinese mills from concluding deals for Japanese scrap. Meanwhile, the mills preferred consuming South Korean-origin ferrous scrap.
  
  
• Scrap export price trend down: SteelMint's price assessment for Japanese H2 scrap exports fell to JPY 48,800/t FoB in end-Jun'21 after hitting JPY 51,000/t FoB in mid-May.
  
  
• Japanese domestic scrap prices maintain upward momentum: Tokyo Steel's H2 scrap purchase bid increased from JPY 47,000/t DAP Utsunomiya levels in mid-May'21 to JPY 49,000/t DAP towards end-Jun'21.
  
  

Outlook
Demand for Japanese imported scrap is expected to be on the lower side as the prominent buyer, Vietnam, is severely affected by Covid and lockdown restrictions now. The bid-offer disparities with China, owing to preference for imported billets over scrap, may keep the export volumes down.