Japanese H2 scrap export offers rebound on anticipation of restocking demand
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Japanese H2 scrap export offers rebounded this week after a series of declines since mid-July, though demand from key importing nations remained sluggish. Suppliers in Japan increased their price tags due to rising Chinese billet prices and optimistic market sentiment following recent stimulus measures in China. While buyers are taking a cautious approach and monitoring the market, Japanese suppliers are not hurrying to make offers for November shipments, as they anticipate stronger demand with China's return from the holidays.
According to BigMint's latest assessment Japanese H2 scrap export offers stood at JPY 41,000/tonne (t) ($280/t) FOB Tokyo Bay, up by JPY 700/t ($5/t) from JPY 40,300/t ($275/t) FOB in the previous week.
Domestic FAS collection prices of H2 grade rose to JPY 36,000-38,000/t ($246-259/t) from JPY 35,500-36,000/t ($242-244/t) w-o-w.
Other market updates
Vietnam: The demand for Japanese scrap in Vietnam remained sluggish, with H2 offers rising to $325-330/t CFR Vietnam, but no significant deals were concluded. Market participants expressed cautious optimism, anticipating a potential pickup in restocking activity as the year-end approached. This sentiment was bolstered by rising Chinese billet prices and positive domestic futures sentiment in China. However, many buyers continued to monitor the market from the sidelines.
Vietnam's domestic scrap market faced tight supply due to recent typhoons and floods, which prompted mills to seek more seaborne material. Local scrap prices of H2-equivalent grades slightly increased, with northern prices moving to VND 9,100-9,700/t ($369-$393/t) and southern prices rising to VND 8,500/t. Purchasing behaviours among mills diverged, with some reducing prices while others increased them. Additionally, some Vietnamese mills raised local prices for rebar and wire rods by VND 100-150/t, indicating a slight uptick in downstream activity, but the overall market sentiment remained cautious.
South Korea: Demand for Japanese scrap in South Korea was muted, with H2 offer activity remaining low due to quiet market conditions. Despite stable prices of H2-equivalent Light A grade scrap at KRW 395,000-410,000/t ($299-310/t) and Heavy A grade at KRW 425,000-430,000/t, several public holidays on 3 and 9 October contributed to a slowdown in trading activity.
Two South Korean mills announced price cuts of KRW 10,000/t effective 4 October, attributing these reductions to ongoing sluggish demand and a downward trend in rebar prices. As the spread between rebar and scrap prices narrowed, mills faced increased pressure to adjust their pricing strategies.
Taiwan: Demand for Japanese scrap in Taiwan was subdued in the week as the market braced for Typhoon Krathon, which constrained seaborne H1/H2 50:50 offers.
Outlook
In the near term, Japan's ferrous scrap prices are expected to remain stable, bolstered by rising Chinese billet prices and positive sentiment from China's stimulus measures. Demand from key importers such as Vietnam, South Korea, and Taiwan remains subdued due to cautious buying, weather disruptions, and holidays. Vietnam may experience an increase in restocking by year-end as domestic supply tightens, while South Korea is likely to see further price cuts amid sluggish demand. Japanese suppliers are withholding November offers, anticipating stronger demand once China returns from its holidays, although price movements are expected to be driven by sentiment.