Steel mills in the Tokyo area have started channeling shipments of the semi-finished product to Southeast Asia, where buyers are prepared to pay higher prices than Japanese re-rollers, market sources said.
While the sale of Japanese billet to Southeast Asia is not unprecedented, it is indeed not commonly seen. It typically takes place during periods when domestic prices in Japan are too low for billet producers in the country.
Japan’s subdued steel market has weighed on prices for ferrous scrap, a major trader of the steelmaking raw materials in the country said.
The availability of cheaper scrap encourages steelmakers to produce their own crude steel instead of buying billet to re-roll.
The decreased domestic demand for billet in turn puts pressure on producers of the semi-finished product to look elsewhere.
“The Japanese billet market is now weak, so there are exporters moving billet out from the Tokyo area to Southeast Asia,” a source...