Japanese scrap export prices hit one-month high despite muted demand

Japanese scrap suppliers maintained the momentum of keeping scrap prices high despite low demand from the domestic and overseas markets. Buyers are slowing down their bookings of Japanese scrap amid lack of support from the finished steel market.

Meanwhile, prominent scrap-buying countries like Vietnam and South Korea seem to remain stagnant. However, Japanese scrap prices continued to inch up, and the strong price trend is likely to continue for the time being.

SteelMint's assessment of Japanese H2 scrap export prices stands at JPY 50,000-50,500/t ($337-342/t) FOB, moving up by JPY 500/t w-o-w. Prices have hit the highest level in one month, as per SteelMint records.

Lacklustre buying sentiment

• South Korean mills postpone fresh bookings: South Korean mills have postponed fresh Japanese scrap bookings as demand from South Korea's finished steel (rebar) segment has slowed down. However, flat steel demand continued to move at a slow pace.
  
  
• Bangladeshi buyers muted: Major Bangladeshi mills are continuing to maintain silence. However, despite limited demand from end-users, a major mill has booked a US-origin bulk cargo at $410/t CFR. Indications for Japanese H2 scrap at $425-430/t CFR Chittagong.
  
  
• Vietnam quiet on low demand: Vietnam's imported scrap buyers and steel mills remained quiet due to low demand for finished long products in the domestic as well as overseas markets. Some mills have cut their production and are running at 50% capacity. Indicative offers for Japanese bulk H2 to Vietnam were heard at around $390-395/t levels, up by $10-15/t w-o-w.
  
  

Reasons behind scrap price uptrend

• Mills lift rebar prices following energy surge: Japanese rebar producers have decided to transfer the rise in power costs to their product prices, claiming the increment in power charges is sharp and can't be digested only by company efforts. Major mills have decided to add Yen 10,000/tonne ($67.5/t) for sales from 1 November, marking the first price hike since April.
  
  
• National currency volatility: The national currency is trading at a 32-year low against the dollar. The yen is trading at 147.7 in the currency exchange market, appreciating slightly from 150.9 recorded a week back.
  
  
• Tokyo Steel keeps scrap buy prices unchanged: Japan's major EAF steelmaker, Tokyo Steel, kept its scrap buy prices unchanged this week. Last week the company raised bid prices for H2 scrap by JPY 500/t ($3/t) for all of its plants. Post-revision, prices of H2 scrap stand at JPY 49,000/t ($329/t) were delivered to the Tahara plant and JPY 50,000/t ($336/t) to the Utsunomiya plant.
  
  

Outlook: Japanese scrap prices are likely to remain on the higher side. Suppliers may take advantage of currency depreciation which may support cash flow.