Japan's H2 scrap export offers inch up by $1/t despite low demand

This week, Japanese H2 scrap export offers inched up by JPY 200/tonne ($1.3/t) despite sluggish demand from key importing markets. According to BigMint's latest assessments, Japanese H2 scrap export offers stood at around JPY 51,900/t ($33/t) FOB Tokyo Bay, compared to JPY 51,700/t ($329/t) FOB the previous week. The uptick in offers was attributed to the weakening of the JPY against the US dollar.

Furthermore, in Japan's Nagoya region, the steel scrap market took a wait-and-see approach, with H2 scrap prices assessed at JPY 36,000-37,000/t ($229-236/t) and no recent changes. Despite expectations of a price rise due to a higher-than-expected Kanto scrap export tender, demand from South Korea and Vietnam remained low, and electric furnaces had sufficient stock. Construction demand decreased, and overall production activities were stagnant, leading to low scrap generation. Although export prices were slightly elevated due to the weak JPY, electric arc furnaces had to maintain their purchase prices to secure raw materials.

Other market updates

Vietnam: Japanese H2 scrap offers to Vietnam increased by $5/t to $375/t CFR, up from $370/t CFR a week ago. However, Vietnamese mills are currently unable to purchase due to the VND's depreciation against the dollar, making imports more expensive. Additionally, domestic scrap prices were reduced during the week, with mills prioritising billet sales as rolling billets into finished steel proved more cost-effective. Prices of domestic type 1 or H2 equivalent scrap for the 3-6mm grade dropped by VND 100/kg to VND 9,600-9,900/kg in northern Vietnam and VND 8,900-9,000/kg in the southern region.

As per mill side sources, local scrap prices are down about VND 100/kg due to low demand, so imported scrap needs are less. Some mills are opting to buy induction furnace billets to roll into finished products instead.

South Korea: South Korean mills showed limited interest in imported scrap, particularly for HMS (80:20). However, there was a slight increase in traction towards importing shredded scrap during the week. Consequently, a deal for shredded scrap was reportedly concluded at JPY 57,500/t ($366/t) CFR, though the exact quantity could not be verified at the time of publishing this report.

This week, the ferrous scrap inventory at eight South Korean steel mills declined by around 2% to 783,000 t, down from 799,000 t the previous week. Steel scrap inventory has been decreasing for two consecutive weeks, with a notable decline in the southern region following the conclusion of the special purchase period.

Taiwan: During the week, a deal for H1/H2 50:50 scrap from Japan to Taiwan was concluded at around $365/t CFR. But buying interest subsided as offers rose to $370/t CFR. A steel mill official noted that summer weather conditions, with high temperatures and rainfall, will slow down rebar consumption. Consequently, most mills will cut production by around 30% due to high daytime electricity costs, keeping scrap demand low in the short term.