Japanese H2 scrap export offers drop further by JPY 1,100/t ($7/t) w-o-w

This week, Japanese H2 scrap export offers experienced a downtrend due to the recovery of the JPY against the US dollar. Notably, while the export offers decreased in JPY terms, they rose in US dollar denomination, leaving buyers surprised and cautious.

Currently, 1 JPY stands at 0.00671 USD, up from 0.0065 USD on 26 July, 2024.

As a result, market activities slowed following a second round of sharp appreciation in the Japanese currency. A majority of suppliers either revised offers slightly higher or decided to withhold cargoes, anticipating that buyers would reject higher scrap prices in the current sluggish downstream market.

Similarly, the largest EAF steel producer, Tokyo Steel, decided to reduce its domestic ferrous scrap procurement prices, effective 2 August, 2024. The company lowered prices by JPY 1,000/t ($7/t) at its Tahara and Utsunomiya plants, setting the new price for H2 at JPY 49,500/t ($333/t) and JPY 50,000/t ($336/t), respectively. At the Okayama plant, prices dropped by JPY 500/t ($3/t), bringing the new price to JPY 48,500/t ($326/t). The company decided to lower bid prices for all grades of scrap at all its electric arc furnace steel plants due to the significant appreciation of the JPY against the US dollar.

Thus, BigMint's latest assessment of Japanese H2 scrap export offers dropped by JPY 1,100/t ($7/t) to JPY 48,900/t ($329/t) FOB Tokyo Bay in comparison with JPY 50,000/t ($336/t) FOB in the previous week.

Domestic FAS collection prices for H2 grade also fell to JPY 49,000-50,000/t ($329-336/t) compared to the previous week's range of JPY 50,000-51,000/t ($336-343/t).

Other market updates

Vietnam: Vietnamese steel mills did not place any firm bids for Japanese scrap due to fluctuations in the JPY, making imports from Japan costlier in dollar terms. As a result, no firm offers or negotiations occurred during the week. Instead, Vietnamese mills turned to short-sea sourcing from Hong Kong and reportedly booked a 50:50 grade scrap at around $350/t CFR Vietnam.

Meanwhile, offers for H2 scrap from Japan stood at $365-370/t CFR Vietnam.

Additionally, a major steel mill, Hoa Phat has reduced its monthly HRC (SAE1006, non-skinpassed) prices by around $25/t for September and October sales, sources informed BigMint. Post-revision, effective prices stand at approximately $530/t or VND 13,300,000/t for southern region, excluding VAT. The company has lowered its prices to remain competitive in the face of declining domestic demand and falling import prices from China.

South Korea: In South Korea, market activities remained limited during the week due to summer holidays, with most buyers away from the market except for POSCO. POSCO was reported to have shown interest in HS and shredded scrap, submitting a bid for both at JPY 57,500/t ($386/t) CFR South Korea.

The domestic market remained steady, with H2 equivalent light A grade scrap priced at KRW 380,000/t ($278/t), and heavy A grade scrap at KRW 410,000/t ($300/t).

Taiwan: The imported scrap market in Taiwan experienced a slight correction as the finished products sector struggled to recover after last week's typhoon. A few deals were heard to have been concluded during the week for US-origin bulk HMS (80:20) scrap at around $345/t CFR Taiwan, down slightly from $345-348/t CFR in the previous week. However, suppliers kept offers unchanged at $350/t CFR due to high transportation costs and lower collection in summer. Taiwanese mills, inactive during the typhoon, resumed activity on Monday but were not willing to pay more than $345/t CFR.

Offers for Japanese H1/H2 bulk scrap were around $365/t CFR, slightly higher on the week amid currency fluctuations, but Taiwanese buyers preferred more competitive US-origin scrap.

Additionally, Feng Hsin Steel, Taiwan's largest rebar producer headquartered in Taichung, has decided to roll over its rebar list prices and procurement prices for local scrap for transactions from 29 July to 2 August, according to a company official. The mini mill's list price for 13mm dia rebar remains at TWD 19,300/t ($587/t) exw, unchanged for the fourth consecutive week. It continues to pay TWD 10,500/t for local HMS 80:20 scrap, the same level since early June. The price of US-sourced HMS 80:20 scrap was reported at $347/t CFR Taiwan, unchanged for the second week, while the price of Japan-origin H2 scrap also remained stable at $357/t CFR Taiwan.

Outlook

Japanese H2 scrap export offers are likely to witness a drop in the near term due to the strong recovery of the JPY against the US dollar, coupled with subdued seaborne demand.