Japanese H2 scrap export offers plunge to two-year low
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This week, Japanese H2 scrap export offers plummeted to their lowest point in nearly two years, a level not seen since August 2022. The market has been in a steady decline since mid-July 2024, with nine consecutive weeks of price drops. Offers have fallen from JPY 52,100/tonne (t) ($371/t) FOB Tokyo Bay on 12 July to JPY 42,000/t ($299/t) FOB today.
On a w-o-w basis, prices dipped by JPY 1,500/t ($11/t) from JPY 43,500/t ($310/t) FOB on 6 September.
The decline in export offers was driven by weak demand from traditional import markets and Tokyo Steel's continued price cuts amid high inventory levels. The appreciation of the Japanese currency (JPY) against the US dollar has put additional pressure on export prices.
Notably, today, Tokyo Steel trimmed domestic scrap procurement prices for the seventh consecutive time in September, with a total reduction of JPY 4,000-5,000/t ($28-36/t) so far this month. Current H2 scrap prices range within JPY 40,000-42,000/t ($285-299/t) across plants.
Other market updates
Vietnam's demand for Japanese scrap eases: Demand for Japanese scrap in Vietnam has softened due to weak market conditions and in anticipation of further reductions in domestic scrap prices in Japan. H2 scrap offers to Vietnam have dropped to $347-350/t CFR, but buyers are bidding lower, around $330-335/t. This bid-offer gap indicates limited buying interest from Vietnamese mills, who are hesitant to accept higher-priced offers amid sluggish demand and competition from cheaper alternatives such as US-origin containerised scrap.
South Korean mills stay away: In South Korea, demand for Japanese scrap is weak. South Korean mills have shown little interest in Japanese scrap due to a slow construction market and high inventory levels. Offers for H2 scrap from Japan are not attracting bids, as mills are avoiding high-priced spot market bids and focusing on cheaper alternatives, such as Russian scrap, for which deals were recently heard at $335/t CFR.
Taiwan buyers attracted to cheaper alternatives: In Taiwan, demand for Japanese scrap is currently low. Offers for H1 50:50 scrap have reduced to $330-335/t CFR, but there is minimal buying interest. Taiwanese mills are not engaging in the Japanese export market, as they seek more competitive options, particularly containerised scrap from the US, which is perceived to have better value.