Japanese scrap export offers fall to 1-year low on lower bids from South Korea, Vietnam

Japan’s ferrous scrap export trades are yet to improve despite offers falling to around one-year low. Buyers in overseas markets are waiting for clear market direction. However, bids from prominent Japanese scrap buyers like South Korea and Vietnam have fallen further compared to last week.

SteelMint's assessment for Japanese H2 scrap export prices stands at JPY 41,000/t ($299/t) FOB, down by JPY 4,500 ($32/t) w-o-w.

Meanwhile, last week’s Kanto tender outcome which had fallen by around JPY 9,006/t ($66/t) m-o-m in July, has slowed down market activities as there is a widespread anticipation of further price correction.

Factors behind drop in export prices:

• South Korea’s Hyundai Steel cuts bids for Japanese scrap by $90/t m-o-m: Hyundai Steel has cut bids for Japanese scrap sharply by JPY 12,500/t ($90/t) for H2 and higher-grade scrap as against the last bids presented on 9 June. Bids for H2 scrap are now at JPY 40,500/t ($292/t), while those for HS and shredded are at JPY 45,000/t ($324/t) FOB. Interestingly, the company has bid for Japanese scrap after a gap of over one month. Lower bids at Kanto tender led to the drop in Japanese scrap export prices.
  
  

Meanwhile, South Korean steel majors cut domestic scrap purchase prices from 21 July, as per SteelDaily. POSCO and SeAH Besteel cut prices by KRW 20,000/t ($15/t) with POSCO lowering prices for Pohang and Gwangyang works. Hyundai Steel and Dongkuk Steel trimmed prices by KRW 10,000/t ($8/t) with the former lowering prices for its Pohang, Incheon, and Dangjin steelworks while the latter for its Incheon plant.

• Vietnam’s trade yet to improve, offers drop: Vietnam's imported scrap trade is yet to gain momentum despite prices declining to the lowest level in over a year. Heavy rainfall in many parts of the country, especially in the southern region, impacted day-to-day trading activities. Finished long steel in the domestic and overseas markets witnessed subdued demand. Indicative H2 offers from Japan are at $370/t CFR, down $10/t from Monday. Negotiations for H2 bulk scrap cargo are going on, although fresh deals are yet to be heard
  
  
• Bangladesh buyers prefer non Japanese scrap cargoes, LC issue a worry: Bangladeshi buyers remain active in booking bulk cargoes; however, Japanese offers are yet to come at workable levels. One bulk cargo was heard booked from Australia/New Zealand apart from Japan's Kanto tender booking seen last week. In a recent deal concluded, a major mill based in the Chittagong region booked a 30,000-tonne mixed bulk cargo from Australia/New Zealand. The cargo comprised 18,000 t of bonus at $430/t and 12,000 t of HMS 1&2 (80/20) at $420-425/t CFR Chittagong basis. However, LC related issues have kept trade activities limited.
  
  

Japan’s Tokyo Steel cuts scrap purchase prices by around $20/t: Tokyo Steel has reduced scrap purchase prices for the first time this week after bids for Kanto scrap export tender dropped. The company has reduced bids by up to JPY 2,500/t ($18/t) for all of its plants, effective 23 July. After adjustment, bid prices for H2 scrap are at JPY 46,000/t ($334/t) supplied to the Tahara plant and JPY 44,500/t ($323/t) delivered to the Utsunomiya works.

Outlook: Japanese ferrous scrap export prices may further correct considering the lower bids from overseas buyers after the Kanto tender.