Japanese scrap export prices fall in recent booking for South Korea

Japanese scrap prices to South Korea have fallen considerably in latest deals, in line with the decreasing offers since last week closing, after observing a continuous surge for the previous 8-9 weeks on tight availability at Japanese yards.

Among the latest deals, major steelmaker Dongkuk Steel has booked a small batch of 3,000t Japanese H2 scrap, at JPY 26,500/t ($249/t) CFR South Korea, which translates to around close to JPY 24,500/t FoB Japan ($ 230/t). The deal has concluded at a sharply lower price against the deals at JPY 27,000/t FoB Japan in mid-June.

Offers for Japanese H2, after peaking at JPY 27,500/t FoB Japan ($258/t) earlier last week, had already come down to JPY 26,500/t FoB by last week closing, down by JPY 1000/t ($9/t). But with this deal, prices have plummeted by more than JPY 2000/t ($19/t) in just over a week.

It was observed that after the sharp uptrend in Japanese export offers, South Korean buyers had slowed the buying activities from Japan, and instead preferred North American and Russian cargoes whose prices were mostly stable in the last 1-2 weeks, and booking a few bulk cargoes from USA and Russia, at $279-282/t for US-origin HMS 1 and $270/t for Russian A3 grade respectively, CFR South Korea basis.

At the same time, many South Korean mills had been preferring Korean domestic scrap recently, buying in good quantities expecting that the Japanese prices were only on a short-term high and would eventually come down. These factors led to Japanese suppliers having to cut their offers in the recent days. Few Japanese traders believe offers may move down further.

Japanese domestic prices, which had followed the export offer rally, amid shortage of material in Japan, is also expected to observe some price correction this week, especially for the Kanto region, where Tokyo Steel's Utsunomiya plant had observed an exponential growth in the last one month.

inputs from SteelDaily