South Korean mills resume bidding for Japanese scrap as prices hit four-month low

Japanese scrap export offers have fallen continuously throughout May'22. Prices have dipped to a four-month low, and demand from domestic and overseas buyers remain subdued.

On the other hand, South Korean mills have lowered their purchase bids for Japanese scrap this week. If Japanese suppliers want to sell to South Korea they will have to lower their offers, SteelMint understands. Meanwhile, Tokyo Steel continued to cut domestic scrap purchase prices.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 53,000/t ($417/t) FOB, down JPY 4,000/t ($32/t) w-o-w.

Buyer market overview

• South Korean buyers resume bid for Japanese scrap: South Korea's major buyers have resumed bids for Japanese material. Hyundai Steel has cut bids for Japanese scrap sharply by JPY 12,500/t ($98/t) for H2 grade and JPY 13,500/t ($106/t) for shredded scrap after a gap of around six weeks. Bids for H2 scrap are now at JPY 53,500/t ($420/t) while those for shredded are at JPY 57,000/t ($447/t) FOB. Weak global market sentiments and the selling pressure on Japanese suppliers led to the significant price cut.
  
  

Following Hyundai Steel's bid announcement, the other major South Korean steelmaker POSCO floated bids for premium grade Japanese material after a gap of three months. Bids for HS grade material were at JPY 64,000/t CFR ($504/t) while bids for shredded scrap were at JPY 63,000/t ($496/t) CFR. Prices have fallen significantly due to sluggish overseas sales of Japanese scrap.

South Korea's major mills like POSCO, Dongkuk and Hyundai Steel have cut domestic scrap purchase prices by KRW 10,000/t ($8/t), as per Steel Daily.

• Vietnam mills away from Japan market: Vietnamese steel mills were mostly away from the Japanese market as offers remained too high. Offers for Japanese H2 scrap was at $490/t CFR Vietnam, down $10/t compared to Monday. Recently a steelmaker has booked 15,000 t of USA-origin HMS 1&2 (80:20) bulk cargo at $475/t CFR. The sluggish domestic market has led to the shut down of some billet casters ahead of the rainy season.
  
  

Japan's domestic market

• Toyota to trim auto output: Toyota Motor, the biggest Japanese automaker, decided to cut its output plan for June due to semiconductor shortage as well as the pandemic. Market sources shared that Japan's flat steel consumption by the domestic auto sector is unlikely to pick up in the current quarter.
  
  
• Tokyo Steel cuts scrap buy prices for all works: Tokyo Steel, Japan's largest EAF steelmaker, reduced its scrap purchase prices for the seventh time this month due to the absence of firm overseas bids. The company cut bids by JPY 1,000/t ($8/t) for all its steelworks effective from 26 May. Post revision, bid prices for H2 scrap are at JPY 58,000/t ($456/t) delivered to Tahara, while prices for Utsunomiya are at JPY 58,500/t ($460/t). In addition, Japanese steelmakers are also lowering their purchase prices following Tokyo Steel.
  
  

Outlook: Considering the bids presented by the South Korean mills, Japanese scrap export offers are likely to remain under pressure in the near term.