Japanese scrap export offers fall to over two-year lows, market awaits Kanto tender outcome

Japan's scrap export offers have fallen further on the back of limited demand from overseas buyers. The lower demand for finished steel from domestic and overseas buyers pulled down the scrap offers.

Meanwhile, the increased rebar inventories with South Korea and Vietnamese mills is due to slow buying interest from end-users, hence the scrap trade from Japan remained on the lower side.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 36,000-37,000t ($266-273/t) FOB, down by JPY 2,000 ($14/t) w-o-w. Prices have come down to over two-year lows.

Meanwhile, Japan's Tokyo Steel kept its domestic scrap purchase prices unchanged this week. Moreover, the Obon holidays will continue from 10-16 August 2022 in Japan, and repair and maintenance work is scheduled for major electric furnace steelmakers in August.

Japan's scrap buyers' market overview

• South Korean mills cut domestic scrap buy prices by up to $15/t: South Korean steel majors will cut domestic scrap purchase prices from 1 August, as per SteelDaily. Hyundai Steel and Dongkuk Steel trimmed prices by KRW 10,000/t ($8/t). The former will cut prices for its Incheon and Dangjin steelworks and the latter for its Incheon plant.
  
  

In contrast, mills desisted from bidding for Japanese scrap for this week after last week's Hyundai Steel bid and actively traded in domestic material.

• Vietnam's scrap buyers absent: The imported scrap market is likely to remain dull for the next couple of weeks, owing to limited credit availability with banks, caused by an unstable economic scenario. Meanwhile, the continuous decline in domestic scrap prices is likely to keep buyers active in the domestic market on cost-effectiveness. Indicative bulk H2 offers from Japan are at $345-350/t CFR, unchanged from Monday.
  
  
• Bangladesh books bulk Japanese scrap cargo: Indicative offers for Japanese bulk H2 material were at $450/t CFR levels earlier in the week. There is buzz in the market that one bulk cargo, containing 18,000 t of HS and H2 material, have been booked recently. The cargo was booked at an average price of $425/t CFR basis. However, the deal remained unconfirmed.
  
  
• Ferrous scrap exports slip 25% in H1CY22 on strong domestic demand: Japan, one of the prominent ferrous scrap exporters, recorded a sharp fall of 25% in export volumes in H1CY22 (January-June 2022) to 3.04 million tonnes (mnt) from 4.07 mnt in H1CY21, as per SteelMint's customs data. Exports dropped as Japanese suppliers showed less interest in lowering offers further amidst tight domestic scrap generation caused by lower automobile production and strong domestic demand.
  
  

Japan's market

• Tokyo Steel scrap purchase prices unchanged this week: Following the scrap export offers, Tokyo Steel, Japan's largest EAF steelmaker, had continued to lower its scrap purchase prices for the last three months. But this week the company held its purchase price. Currently, bid prices for H2 scrap were at JPY 42,000/t ($311/t) delivered to Tahara, and at JPY 41,000 ($303/t), delivered to Utsunomiya works in the Kanto region via land route. Interestingly, prices have fallen to an 18-month low for H2 grade at the Utsunomiya works.
  
  

Outlook

Japan's monthly Kanto Tetsugen ferrous scrap export tender has been scheduled for 10 August 2022, sources informed SteelMint. The tender prices fell considerably to JPY 9,006/t ($66/t) in July from JPY 53,560/t ($399/t) fetched in June 2022. Market participants are looking forward to the August tender for a price outlook.