Japan: Scrap market stays sluggish during Golden Week, Russian billets impact prices

Japan's domestic market for scrap steel remained weak as it entered the Golden Week (GW) holidays.

Demand in South Korea and Vietnam, which are its main export destinations, was sluggish, and there was stagnation in terms of new exports. Supply and demand have eased significantly, especially in the Kanto region, and Gulf prices have fallen steeply.

The inflow of Russian-made billets into the Asian market is also said to be a factor in pushing down the steel scrap market. The depreciation of the yen is the only strong factor, but in the near term, people expect the market to drop even further while keeping an eye on the trend of new exports.

The domestic steel scrap market, which turned soft in mid-March, entered the Golden Week without an increase in supply and demand.

Electric furnace manufacturers in the Kanto region continued to receive scrap in good volumes for one or two days during the consecutive GW holidays, and the restrictions on receiving goods were not lifted. The Kanto Gulf Price (H2), which had shown resistance to decline before GW, also fell by JPY 500/t to JPY 47,000~47,500/t as of 2 May.

As of 2 March, the actual purchase price (H2) of electric furnace manufacturers in the Kanto area was JPY 48,000~48,900/t. Due to sluggish new exports, Gulf prices have fallen ahead of manufacturers' bids.

Overseas demand for Japanese scrap remains sluggish. Korea's Hyundai Steel lowered its H2 bid price by JPY 1,000/t from the previous round to JPY 47,800/t FOB (FAS equivalent JPY 46,800/t) on 27 March. In response to prices having fallen below the Gulf price, an electric furnace manufacturer in Japan said: "I think they wanted to show before GW that the decline would continue."

In Vietnam, domestic demand for construction declined due to the bursting of the real estate bubble. Consumer confidence in scrap steel is also declining. Currently, inquiries for Japan H2 are at about $370/t CFR. There is a large gap in offers, and it is difficult to close contracts at such levels.

In addition, cheap Russian billets are flowing into Taiwan, the Philippines and other countries, leading to a decline in demand for Japan scrap.

On the other hand, the depreciation of the yen was the only strong factor.

Outlook

In the near term, the export bidding by the Kanto Railway Gen Cooperative Association, which will be held on 10 May, is a focus area now. High bids are expected to be made to Bangladesh and other countries, but some yard traders said, "It could be a temporary factor. and The focus of the market is whether good prices will be available for Vietnam and South Korea, which are our mainstays."

Note: This article has been written in accordance with an article exchange agreement between Japan metal daily and SteelMint.