Japanese scrap export offers likely to rise; buyers await Kanto tender outcome

Japan's scrap prices continued to be largely stable at the beginning of the New Year. Trade remained slow in the absence of active inquiries from buyers this week. Japanese traders expect scrap demand from South Korea and Taiwan to improve in the near term.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 50,000/t ($372/t) FOB, stable w-o-w.

Japanese material could see price increases as scrap availability is likely to be limited due to slower scrap supply in response to growing domestic demand.

Scrap supply to overseas markets may get even tighter as domestic steelmakers intensify focus on carbon emissions and increase scrap usuage. Ferrous scrap has now become a strategic raw material in many countries, including Japan.

Additionally, Japan's Tokyo Steel kept its domestic scrap purchase prices unchanged for the third consecutive week. The last price revision was seen on 14 December. Bid prices for Tokyo Steel for its Tahara and Utsunomiya plants remained unchanged at JPY 49,000/t ($356/t).

Buyers yet to resume bookings

• South Korea: South Korean mills are mostly quiet and have not bid for Japanese material this week. Hence, mills are showing less interest in Japanese material. Meanwhile, major mills like Hyundai Steel did not present bids for Japanese scrap after 27 December. Prices of South Korea's domestic material continued to edge up. Mills may resume trades from Japan as they have low inventory in hand.
  
  
• Vietnam: Vietnamese mills are largely quiet for yet another week. After the holidays, buyers are awaiting a clear market direction and the monthly Kanto scrap export tender's outcome. The country's steel major, Hoa Phat, booked a bulk 30,000 t deepsea cargo at an average price of around $410/t CFR, before the holidays. Mills have sourced material ahead of the approaching Tet holidays in end-January. Further, the upcoming Kanto scrap export tender's bid prices may help steel producers ramp up inventory.
  
  
• Bangladesh: Bangladeshi scrap buyers are still struggling to open new LCs. It has been around three months since steelmakers have been working with low capacity due to low demand and high input costs. US-origin bulk scrap offers were heard at $450/t levels. However, no deals were heard. No firm offers were received from Japan either.
  
  

Outlook

Japanese scrap export offers for overseas buyers are likely to emerge more clearly after the Kanto scrap export tender scheduled for 12 January. Last month, around 13,000 t of scrap was awarded, and the average price for H2 scrap stood at around JPY 47,568/t ($349/t) FAS in the Kanto Tetsugen tender, SteelMint learnt from sources.

Considering the sharp hike in offers from the US by $30-35/t in just one week for Turkish buyers, offers to Vietnam and Taiwan are likely to increase. Hence, Japanese suppliers too may keep their offers high.