Japan's ferrous scrap export offers up JPY 500/t ($3/t) amid currency depreciation

Japan's ferrous scrap (H2) export offers have registered a slight uptick due to the depreciation of the JPY against the US dollar and the lack of firm offers from traders who were primarily focused on the domestic market.

SteelMint's weekly assessment of Japanese H2 scrap export offers on a FOB basis stands at JPY 50,500/tonne (t) ($347/t), up JPY 500/t ($3/t) in comparison with JPY 50,000/t($344/t) a week ago.

Tokyo Steel, a major steel producer in Japan, has recently updated its purchase prices for domestic ferrous scrap, marking the first change since 23 August, 2023. These adjustments will become effective on 2 September. Notably, at the Utsunomiya factory, prices for H2 scrap will decrease by JPY 1,000/t, reaching JPY 50,000/t (equivalent to $344/t). Meanwhile, prices at the Tahara plant remain unchanged at JPY 50,000/t ($344/t), while at the Okayama too prices will remain stable at JPY 51,000/t ($351/t).

Other market updates

South Korea: South Korean steel mills have adopted a wait-and-see approach this week due to sluggish demand, particularly in the real estate sector. Additionally, the absence of substantial bids and the reluctance of two major mills to engage in seaborne trade have contributed to this cautious stance.

During the week, new scrap arrivals into South Korea witnessed a downtrend after a substantial rise owing to the arrival of large mother ships last week. A total of 49,031 t of new iron scrap arrived at major ports of the country, as assessed on 31 August, down by over 64% or 86,000 t w-o-w.

Scrap inventories of major steel-makers have undergone a significant shift after three weeks, with total inventory of eight leading steel companies standing at 868,000 t, reflecting a 2% (17,000 t) increase w-o-w, as assessed on 29 August.

Taiwan: In Taiwan, there was limited enthusiasm for purchasing imported scrap due to sluggish demand for finished steel products. Furthermore, Taiwanese mills had already procured ample stocks during August.

Vietnam: Steel manufacturers in Vietnam have been postponing their scrap procurement due to a combination of factors, including sluggish sales of finished steel products, reduced profit margins resulting from a narrower spread between scrap and billet, and the weakness of the VND (Vietnamese dong).

Outlook

Japan's H2 export offers have nearly reached their peak, which means there is limited room for further hikes. Additionally, South Korea and Vietnam, two of the largest buyers of Japanese scrap, have refrained from importing due to slow sales in their respective domestic finished steel markets. Thus, it is unlikely that Japanese scrap exports will witness significant growth.