Japan's EAF mills receive fewer billet exports inquiries

Japan's electric-arc-furnace (EAF) steel producers may be struggling to ink more billet export deals to fend off a weakening domestic steel market, as overseas buyers have showed waning enthusiasm in booking recently, mini-mill sources in Tokyo and Osaka shared on July 7.

Meanwhile, the Japan-origin SD295A 120-150mm billets are bid at $380-390/tonne CFR East Asia, or down $10-20/t from end of June, according to the Japanese trading house sources.

Besides, customers from Taiwan, South Korea, China, and the Philippines have been retreating from the market since the end of June after having actively booking the Japanese billet earlier on, especially when they have noted the softening in the Japanese scrap prices both for domestic sales and exports.

The Japanese mini-mills have started trimming their scrap buying prices since the last week of June, and by July 7 the mills around Tokyo have cut the prices by a total of Yen 5,000-6,000/tonne ($47-56/t) , Japanese sources confirmed.

"The decline has been sharp, so we can't blame the overseas customers' latest move, as they probably expect billet offering pricesto drop further," a trader in Tokyo said.

He explained that most of the Japanese mills have been exporting billets not to make profits but to make up for the less steel demand in the domestic market, so as to maintain a steady production at best.

It seems to get more challenging now with the decreases in exports inquiries, he added, predicting that "August production by mini-mills, thus, may be way below their expectations though the month is not a robust production month anyway".

In the coming months, Japan's billet exports, therefore, may subside, as it usually take 1-2 months for the booked billet to be delivered, and Chinese buyers, for example, have been getting quiet recently, an official from a Tokyo-based mill predicted.

Some Japanese mini-mills had been aggressively exporting billet since the end of 2019 when the domestic steel demand went downside, and as a result, Japan's billet exports have been above 100,000 tonnes/month since February, though it may fall below the level under the current circumstances, according to a sales official from a Osaka-based steel mill.

In May, Japan's billet exports totaled 110,756 tonnes, up 39.7% on year but down 3.2% on month, which was way higher than the monthly average of 71,755 tonnes/month for the calendar year 2019 too, according to the latest data by Trade Statistics of Japan.

Japan's May Billet Exports by Country/Region

Source: Trade Statistics of Japan

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.