Japan's H2 scrap export offers see sixth consecutive hike amid better overseas demand

Japan's H2 scrap export offers have increased for the sixth consecutive week, driven by tight supply in the domestic market and improved demand from major importing nations looking to replenish their stocks. As a result, SteelMint's weekly evaluation showed a rise of JPY 300/tonne (t) ($2/t), reaching JPY 51,800/t ($366/t) FOB Tokyo Bay, compared to the previous week's JPY 51,500/t ($636/t) FOB.

The steel scrap market in the Nagoya region of Japan had observed a notable increase of JPY 500/t, with H2 prices ranging from JPY 35,500/t to JPY 36,500/t earlier this week.

Other market updates

Vietnam: Vietnamese buyers aimed to re-stock ahead of the Lunar New Year holidays and successfully secured a 5,000-t shipment of H2 scrap from Japan during the week, finalising the deal at $395/t CFR Vietnam. Additionally, buyers express satisfaction with the present price levels, highlighting improved margins between scrap and finished steel as a contributing factor to their comfort.

Taiwan: Taiwanese mills showed active interest this week in fear of further price hikes despite having sufficient inventories. A parcel involving 3,000 t of H1/H2 50:50 scrap was booked from Japan by a Taiwanese mill at around $391/t CFR Taiwan. The rise in import offers was also fueled by an uptrend in the local steel market.

Feng Hsin Steel, Taiwan's largest rebar producer headquartered in central Taiwan, decided to raise its rebar list prices and procurement prices for local scrap by TWD 300/tonne ($9.5/t) respectively for transactions over 11-15 December, a company official confirmed on Tuesday. With the latest adjustment, the mini-mill was offering its 13mm diameter rebar at TWD 20,000/t exw for business discussions till today, its highest since the start of May, according to the official. On the other hand, the mini-mill is paying domestic scrap collectors TWD 11,500/t for their HMS 1&2 80:20 scrap, a 7.5-month high, he confirmed.

South Korea: South Korean mills showed a lack of interest in procuring H2 scraps from Japan, primarily due to the availability of more cost-effective materials in the domestic market. Despite this trend, POSCO submitted a bid of JPY 58,000/t CFR for Japanese high-grade scrap on 13 December, marking an increase of JPY 500/t. Bids for shredded scrap were at JPY 57,500/t CFR, reflecting a rise of JPY 1,000/t. Shipment completion is anticipated by 25 January, 2024, with Gwangyang or Pohang as the designated landing ports. The price gap between high-grade scrap and shredded scrap narrowed to JPY 500/t. The estimated FOB price for high-grade scrap, minus freight, hovers around JPY 54,500-55,000/t.

The combined steel scrap inventory of eight South Korean steel firms totalled 979,000 t, down by 12,000 t or 1.21% from the previous week due to limited mill production.

Outlook

The export offers for Japan's H2 scrap are anticipated to persist on the higher side due to limited availability and continued re-stocking demand.