Japan's scrap export tender fetched bid prices mostly stable in Aug'23

Japan's Kanto Tetsugen scrap export tender for August 2023 concluded today with bid prices mostly stable compared to bids received in July. A total of 15,000 t of H2 scrap was successfully awarded at a price of JPY 49,799/t ($348/t) FAS to Bangladesh, sources informed SteelMint.

It is worth noting that FOB prices for Japanese scrap exports are lower than FAS prices by $9/t tentatively.

The Kanto tender is considered a benchmark for the Japanese scrap export market. Interestingly, Japan's Tokyo Steel kept its domestic purchase price unchanged from last one month. After the last revision followed by last month's Kanto tender outcome, the purchase prices were as follows:

• Tahara at JPY 49,000/t ($349/t)
  
  
• Okayama at JPY 49,500/t ($352/t)
  
  
• Utsunomiya at JPY 50,000/t ($356/t)
  
  

The purchase price of the Utsunomiya plant in the Kanto region is high as compared to export offers.

The Ministry of Economy, Trade and Industry (METI) of Japan announced on 8 August that crude steel production in the country is expected to increase by 1.9% y-o-y to 22.23 million tonnes (mnt) in the July-September period (Q3CY23). This would be the first y-o-y increase in seven quarters, since the October-December 2021 period, as per a Japan Metal Daily report.

Buyers' market overview

• Bangladesh active in bulk booking: In today's Kanto tender, major mills from Bangladesh have participated actively and placed the highest bid for the Japanese material. Maintaining its procurement consistency, steel mills have booked 15,000 t of H2-grade bulk cargo. Notably, the country booked over 15 bulk cargoes last month, including 7-8 cargoes from Japan in the range of $410-440/t CFR for high-grade material.
  
  
• Vietnam slows down: Vietnamese imported scrap market witnessed a slow trend due to bearish sentiment rendered it too risky for buyers to engage in significant quantities of imported scrap. Amidst prevailing uncertainties, buyers and sellers exercise caution in their dealings, mindful of the fluctuating market conditions. Producers' shift towards procuring semis instead of raw materials adds a new dimension to the market landscape, with potential implications for supply and demand dynamics.
  
  
• South Korean mills opt for maintenance: Major scrap buyers of the country, POSCO and Hyundai Steel, will be conducting repairs in September. POSCO will repair its third hot rolling mill at Gwangyang works for 20 days, beginning in early September. Hyundai Steel will repair its second hot rolling mill at Dangjin Steel Mills for 10 days in mid-September, followed by the repair of the first hot rolling mill in mid-October. On the other hand, Hyundai Steel increased imported Japanese scrap (H2 and HS) bids last week. Bids for H2 stand at JPY 48,800/t ($343/t) FOB, up JPY 1,100/t ($8/t) and those for HS are at JPY 53,300/t ($374/t) FOB, up JPY 800/t ($6/t). On the other hand, POSCO kept prices unchanged.
  
  

Outlook

The scrap export market in Japan is expected to remain stable in the coming months, with demand supported by the recovery in crude steel production. However, the Vietnamese imported scrap market remains uncertain, as buyers continue to exercise caution due to the prevailing uncertainties. The maintenance schedules of major South Korean steel mills could also impact the scrap demand in the region.

Overall, the scrap market is expected to remain volatile in the near-term, with prices fluctuating in response to changes in demand and supply conditions.