Overseas buyers keen on billet from Japan's EAF mills

Japan's electric-arc-furnace (EAF) steel producers have refrained from selling their billet to the Asian buyers despite the recent active inquiries, still waiting for further price rises, officials from mini-mill in Tokyo, and Osaka shared on November 5.

The Japan-origin SD295A 120-150mm billets are currently bid at Yen 44,000-44,500/t ($422-427/t) FoB, up Yen 500/t from the end of October or equivalent to around $440-450/t CFR East Asia, according to sources.

"We are targeting higher at around Yen 45,000/t FoB, as billet demand from overseas buyers has been strong, and we can afford to wait for them to raise their bids further, enabling us to shift the higher input costs from scraps, for example," a sales official from a mini-mill in Osaka shared.

"Our billet exports are secondary, basically just to maintain our production at an efficient level, but higher input costs have to be transferred to billet export prices," he explained.

Japan's domestically-generated scrap prices gained a total of Yen 1,000/t over 19-30 Oct'20, and the domestic mini-mills around Tokyo are paying Yen 27,000-27,500/t for the H2 grade scrap, so some others are paying even higher for deliveries, according to the market sources.

The Japanese mini-mills no longer need to act aggressively for billet exports, as overseas buyers have been keen and potential new customers from Asia have been contacting the Japanese suppliers too, according to the market sources, unlike in the past few months since late 2019 when the Japanese producers were looking for channels of exports with the stagnated domestic demand, a Tokyo trader noted.

In September, Japan exported a total of 76,544 t of billet, up 10.7% on the year but down 14.5% from August, which took the whole volume over the first half of current fiscal year Apr-Sep'20 to 617,183 t, or up 45.1% on the year, according to the latest data by Trade Statistics of Japan.

Japan's Apr-Sept Billet Exports by Country/Region (selected)

"We believe most of the customers are the ones that had been importing from China, but they have not been able to do so now with the latter's firm demand domestically, forcing the buyers to look for alternatives such as Japan," he explained.

Indonesian buyers are the new entrants to the market, as domestic steel re-rollers have failed to source enough supplies from Vietnam this year with the latter being busy selling to China, according to the Tokyo trader.

"The actual demand in Indonesia has picked up, but at the same time the Japanese supplies are to fill up the holes left by lower supplies from other countries with much-prioritizing demands from China, and Japan will stay relevant in the market so long as China's demand for billet stays strong," he predicted.