Japan: H2 scrap export offers rise by JPY 1,000/t ($6/t) amid improved demand in Vietnam

This week, export offers for Japanese H2 scrap increased by JPY 1,000/tonne (t) ($6/t), driven by heightened demand from Vietnam, a key importer. BigMint's latest assessment pegged the Japanese H2 scrap export offer at JPY 51,800/t ($335) FOB Tokyo Bay, up from JPY 50,800/t ($329/t) FOB the previous week.

Demand for H2 scrap remained mostly stable throughout the week. Concurrently, H2 FAS prices remained unchanged due to consistent market conditions. Tokyo Steel Manufacturing reportedly maintained its list prices for HRC for the third consecutive month in May, as of 15 April.

Tokyo Steel, a leading Japanese mill, has decided to reduce its prices for domestic ferrous scrap by JPY 1,000/t ($6/t), effective 19 April, 2024. As a result, the new price for H2 scrap at the Utsunomiya plant is approximately JPY 50,500/t ($327/t), while at Tahara and Okayama, prices remained unchanged at JPY 51,500/t ($334/t). This adjustment marked the first price drop in April.

The Utsunomiya plant, specialising in H-beam steel production, encountered equipment failure in its steelmaking line earlier this month. The reduction in purchase price is seen as a measure to align inventory in response to this issue. Full restoration of operations at the Utsunomiya plant is anticipated by the end of April.

Other market updates

Vietnam: Vietnamese steel mills are not actively pursuing purchases, leading to notably low bids due to thin market liquidity. Additionally, there was a noticeable gap between bid and offer prices. For example, the export offer for H2 scrap from Japan to Vietnam stood at approximately $375/t CFR,whereas buyer bids hovered around $370/t CFR. Recently, a deal for H2 scrap was reportedly sealed at roughly $369/t CFR in Vietnam.

South Korea: South Korean steel mills have remained passive in the seaborne market due to sluggish steel demand and the weakening of the Korean won against the US dollar.Furthermore, the eight major Korean steel mills currently possess ample inventory. According to BigMint's recent report, ferrous scrap inventory across these mills experienced a modest 1% decrease, totalling 862,000 t compared to the 868,000 t reported in the previous week.

Additionally, two major steel mills,POSCO and Hyundai Steel, have opted to reduce scrap procurement prices by KRW 10,000/t ($7/t).POSCO will decrease scrap prices at its Gwangyang and Pohang steel mills effective from 19 April, while Hyundai Steel will implement the price cut at its Incheon and Dangjin facilities starting from 25 April.

Taiwan: Feng Hsin Steel, Taiwan's largest rebar producer headquartered in Taichung in central Taiwan, has decided to hike its rebar list prices and procurement prices for local scrap for transactions over 15-19 April to reflect its higher production costs, a company official confirmed on Tuesday.

With its latest adjustment, Feng Hsin is offering its 13mm dia rebar at TWD 19,700/t ($606/t) exw for business discussions till this Friday, higher by TWD 200/t from two weeks earlier, while its buying price for local HMS (80:20) scrap increased by TWD 200/t on fortnight to TWD 11,100/t, the company official confirmed. Global scrap prices delivered to Taiwan have diverged over the past two weeks, with the price of US-sourced HMS (80:20) scrap reaching $365/t CFR Taiwan as of 15 April,gaining by $10/t from two weeks before, while the price of Japan-origin H2 scrap edged down by $2/t during the same period to $368/t CFR Taiwan, according to a local market source.

Outlook

Export offers of Japanese H2 scrap are expected to stay within a narrow range due to sluggish demand from major importing countries. Nevertheless, in Vietnam, slight adjustments in export offers might prompt buyers to consider booking some cargoes, especially considering the existing bid-offer gap.Meanwhile, South Korean mills are anticipated to refrain from participating in the seaborne market due to subdued demand from downstream sectors.