Japanese H2 scrap export offers rise w-o-w but demand dull in key markets
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- Japanese H2 prices rise but demand lags
- South Korea, Vietnam markets struggle amid low demand
Japanese H2 scrap export offers saw a slight increase this week, supported by December's Kanto tender results. The FAS levels remained above last week's FOB levels, with the winning bid settling at $279/t for a 15,000-t cargo, though lower than last month's, boosted confidence amid tight scrap supply and elevated freight costs.
However, weak demand in Vietnam and South Korea, coupled with ample local scrap options, limited further price gains.
BigMint's weekly assessment of H2 export offers on a FOB Tokyo Bay basis rose by JPY 900/t ($6/t) to JPY 43,400/t ($283/t), as traders kept a close eye on seaborne trends and domestic mill dynamics.
Following the Kanto tender, Tokyo Steel, Japan's leading EAF steel producer, revised its scrap procurement prices for the first time this month. Effective 12 December, prices remained unchanged across most plants but dropped by JPY 1,000/t ($7/t) at the Kyushu plant. The updated H2 scrap prices are as follows:
- Tahara, Okayama, Utsunomiya: JPY 41,500/t ($270/t)
- Kansai, Kyushu: JPY 40,500/t ($264/t)
- Nagoya, Takamatsu: JPY 40,000/t ($261/t)
The reduction at Kyushu was attributed to an oversupply of scrap in the area due to low production by EAF mills, as noted by a mill source.
Other market updates
Vietnam: Vietnam's imported scrap market faced weak demand due to sluggish steel sales, mill production cuts, and competition from cheaper domestic scrap priced at around VND 8,400/t for grade 1. The Kanto tender's estimated price of $290/mt FOB Japan made it difficult for Vietnamese mills to accept H2 scrap offers above $320/t CFR Vietnam. Offers ranged between $330-335/t CFR, while bids remained below $320/t CFR, reflecting a significant bid-offer gap.
High freight costs and muted downstream activity further dampened sentiment, with many buyers staying on the sidelines, anticipating potential price declines in the near term. Trading activity remained minimal amid these market challenges.
South Korea: South Korea's imported scrap market remained sluggish this week due to declining rebar prices, reduced mill operating rates, and inventory adjustments. Major steel mills, including Dongkuk Steel, Korea Special Steel, and SeAH Besteel, announced scrap procurement price cuts ranging from KRW 10,000-15,000/t ($7-$10/t), reflecting weak downstream demand. Inventory dynamics showed mixed trends, with central region stocks falling 1.9% w-o-w to 407,000 t, while southern region inventories rose 1.4% to 345,000 t.
Despite high port arrivals of 41,700 t, a record for the year, significant demand for special steel plates primarily drove these shipments. However, overall market sentiment remains bearish, with mills hesitant to make substantial purchases amid weak product markets.
Taiwan: Feng Hsin Steel, Taiwan's leading rebar producer, maintained its rebar prices at TWD 18,200/t ($561/t) exw and local scrap procurement prices at TWD 8,800/t for 9-13 December. Despite global scrap prices dropping further-US-origin HMS (80:20) to $295/t and Japan-origin H2 to $310/t CFR Taiwan-Taiwanese mills opted to hold prices, anticipating stabilisation after weeks of decline.
Outlook
The outlook for Japan's H2 scrap market remains cautious. While the Kanto tender's impact provided short-term support, weak demand in Vietnam and South Korea, along with ample local supply, will limit significant price increases. South Korea's market is pressured by lower rebar prices and reduced mill activity, with scrap procurement price cuts already announced. In Vietnam, sluggish steel sales and competition from domestic scrap are further suppressing demand. Taiwan is stable for now, with mills holding prices in anticipation of a potential market recovery.
