Japan's scrap export market witnesses limited activities w-o-w; offers drop by JPY 700/t

Japan's H2 scrap export offers decreased by JPY 700/tonne (t) ($5/t) w-o-w to JPY 50,300/t ($337/t) FOB due to limited buying interest from major importing nations such as South Korea, Vietnam, Taiwan and Bangladesh.

At the start of the week, Japanese suppliers managed to secure approximately 6,000 t of scrap deals destined for Taiwan. However, the price levels remained firmly on the lower end, ultimately impacting the overall export offering from Japan.

Furthermore, Japanese traders were unable to extend their offers due to the restricted availability of Chinese ships, which were still on holiday.

Japanese suppliers are closely monitoring the upcoming monthly Kanto export tender scheduled for 12 October. Meanwhile, Bangladesh, a traditionally active buyer in this market, is grappling with difficulties related to letters of credit (L/C) issuance. As a result, the predictability of the October Kanto Tender outcome has significantly diminished for suppliers.

Other market updates

South Korea: South Korean scrap buyers have been away from imports amidst muted demand.

In the domestic market, the combined inventory of eight South Korean steel manufacturers for the current week stood at 866,000 tonnes, marking a decrease of 38,000 t, equivalent to 5%, compared to pre-holiday levels. Remarkably, of this 38,000 t decline, POSCO's inventory reduction accounted for nearly the entire amount, with a substantial decrease of 37,000 t.

Taiwan: At the beginning of the week, Taiwanese mills booked about 6,000 t of scrap from Japan at around $370-373/t levels. However, due to ample stocks available with steel mills, a sluggish finished steel sector, and adverse weather conditions due to typhoon Koinu on 5 October, expectations for increased demand for overseas raw materials remain low in the short-term. Additionally, upcoming national holidays on 9 and 10 October are expected to result in a shortened trading week.

Vietnam: Vietnamese scrap buyers are not displaying much interest in procuring imported material amidst the subdued finished steel sector in the domestic market.

For instance, Hoa Phat, a well-known steel producer, has recently reduced monthly HRC (SAE1006, non-skinpasses) prices by VND 240/kg for November 2023 sales. Post-revision, effective prices stand at VND 13,950/kg or $572/t CIF HCMC (southern region) against the previous price of VND 14,190/kg excluding VAT. The company has reduced prices amid subdued demand and competitive imported offers from China. Moreover, VND's depreciation against the dollar makes the fall in dollar terms significant.

Outlook

Japan's H2 export offers are expected to face continued pressure due to sluggish import demand. Additionally, the forthcoming Kanto export tender may encounter further challenges, as Bangladeshi mills are struggling with difficulties related to opening letters of credit (LCs). These factors collectively contribute to an uncertain outlook for Japan's scrap exports.