JAPAN SCRAP: Sharp drop in export prices leads to fresh deals

Export prices for Japanese steel scrap fell heavily over the past week with exporters reducing rates to stimulate fresh bookings, market sources told Fastmarkets on Wednesday June 24.

Asian buyers shunned Japanese scrap offers last week, citing the fact that prices were too high, and instead concentrated on booking material from other sources such as the United States West Coast.
Fastmarkets’ price assessment for steel scrap H2, export, fob main port Japan was ¥24,000-24,500 ($225-229) per tonne on June 24, down ¥2,500 per tonne from ¥26,500-27,000 per tonne one week before.
A deal for 10,000 tonnes of Japanese H2 scrap was heard booked to South Korea at ¥24,000 per tonne fob for August shipment this week, while most offer prices for H2 were at ¥25,000 per tonne and above, market sources said. Additionally, there were very few bids on a fob Japan basis heard for H2, sources told Fastmarkets.
“Buyers are not yet asking for H2 at ¥23,000 per tonne fob because they’re wary in a downward market,” a Japanese exporter told Fastmarkets, adding that many buyers were instead watching and waiting to see if prices would fall further.
“Most South Korean mills are waiting to buy Japanese H2 at under ¥24,000 per tonne fob because their domestic price is decreasing this week,” one Korean trader said.
A second Japanese exporter said that Vietnamese mills have been in no hurry to procure Japan scrap over the last week and waited for lower Japanese offer prices before booking new cargoes.
Japanese H2 was purchased at $265 per tonne cfr South Vietnam on Tuesday, compared with offers at $275-280 per tonne cfr one week before, sources said. Japan H1:H2 (50:50) was also sold to South Vietnam at $266-267 cfr on Tuesday, Fastmarkets heard.
Japan steel mills take price advantage
High domestic scrap prices, together with falling export prices over the last week, means that Japanese mills can easily attract enough scrap now, a Japanese scrapyard source said.
The same source highlighted the case of Shindachi busheling, which had bids from Indonesia at $290-295 per tonne cfr in containers - equivalent to ¥26,500 per tonne fas. Alternatively, Tokyo Steel’s Tahara steelworks can pay ¥28,000 per tonne for the same material, he said.
Higher scrap inflows to mills has led to some steelmakers reducing purchase prices over the past few days, Fastmarkets heard.
Key local scrap buyer Tokyo Steel said on Wednesday that it would reduce its buy price for H2 at its Utsunomiya works by ¥500 per tonne to ¥26,000 per tonne from June 25 onward.
This decline follows 10 price-increase announcements from the steelmaker between May 22 and June 17 while its exports docks tried to secure increasingly lower supply of H2 scrap.
High-grade collection levels still low; sources expect a rise
Fastmarkets’ price assessments for steel scrap Shindachi, export, fob main port Japan and for steel scrap P&S, export, fob main port Japan fell to ¥26,000-26,500 per tonne on Wednesday, down from ¥29,000 per tonne last week.
Fastmarkets’ weekly price assessment for steel scrap shredded, export, fob main port Japan dropped to ¥25,500-26,500 per tonne fob on Wednesday, down from ¥28,000-29,000 per tonne last week.
Offers were heard at ¥26,500 per tonne fob, but buyers from Taiwan only wanted to pay a maximum of ¥25,500 per tonne fob, Fastmarkets heard. That put the premium for HS and Shindachi over H2 at ¥2,000 per tonne, down from ¥3,000 per tonne on May 20.
Tight H2 supply continues to be the main driver for lower premiums, despite the fact that reservoirs of both P&S and Shindachi are themselves hard to come by.
“Shindachi bara offers should be around ¥27,000 per tonne fob but I’m not sure many exporters are willing to fix at this level,” the scrapyard source said.
“Overall collection is still bad and Tokyo Steel may still enjoy good intake this week - they want to keep their steel product prices up,” he said.
Tokyo Steel announced last week that it would raise its steel sales price for July by ¥3,000-5,000 per tonne, depending on product, after higher demand from China and slowly increasing activity from Japan’s construction sector.
The first Japanese exporter source, however, expected a greater inflow of P&S and Shindachi busheling over the next few months while automotive factories ramp up operations and the number of demolitions increase, he said.
Toyota - Japan’s largest carmaker - said on June 22 that it would restart 19 production lines across the country in July, although six production lines at three plants will remain suspended.
More information about Fastmarkets’ expanded Asian scrap coverage can be found on our new Asia Steel Scrap Spotlight. Sign up today for free price and news alerts.

Lee Allen

lee.allen@fastmarkets.com

Published

Lee Allen

June 24, 2020

17:00 GMT

Singapore