Posted on 20 Jan 2021
Japan’s domestically-generated H2 grade scrap prices softened by Yen 1,500-2,500/tonne ($14-24/t) over January 11-15 for both domestic sales and exports, as buyers have successfully bargained for lower prices, Tokyo-based scrap traders confirmed.
Japan’s mini-mills cut their scrap buying prices by around Yen 1,500-2,000/t on week to around Yen 41,500-42,000/t for H2 material as of January 15, according to market sources.
“Scrap prices surged further in the previous month while finished steel prices had been increasing but at a much slower pace, so mini-mills have cut their scrap buying prices to narrow the gap, and shippers on the other hand, have not been actively collecting scrap either, which has resulted in the softening in the scrap prices for now,” a Tokyo scrap trader explained.
As of last Friday, shippers at the Tokyo Bay area such as Odaiba, Funabashi and Yokohama – the key ports for scrap exports and delivery to the domestic mills in western Japan – were paying around Yen 40,500/t FAS for H2 material, down Yen 2,500/t on week, according to the traders in Tokyo.
For the whole week of last week, the Japanese shippers had reportedly loaded about 60,000 tonnes of scrap, or 10,000 tonnes lower than expected, enabling them to bargain for lower prices.
“Scrap buyers have been cutting their procurement prices, while scrap arrivals have smoothened, as suppliers have rushed to deliver on the concern of further price falls with the scrap prices having strengthened for so long, and shippers may, thus, have steady arrivals this week,” a second Tokyo-based scrap trader commented.
On January 13, the winning bid for the monthly scrap export tender issued by Kanto Tetsugen alliance of scrap dealers around Tokyo was Yen 44,751/t FAS for the H2 material, or equivalent to around Yen 45,500/t FOB, which was much higher than expected, thus failing to lend much support to the Japanese scrap prices, as reported.
Besides, on January 14, Hyundai Steel, South Korea’s major electric-arc furnace steel producer, bid for H2 grade scrap at Yen 42,000/t FOB, down Yen 1,500/t from the previous exports booking by a Vietnamese mill around January 8 that was at $465/t CFR for H1&H2 50:50 material, or equivalent to Yen 43,500/t FOB.
On the same day, Hyundai also bid for Shindachi material at Yen 47,500/t FOB and for HS and shredded at Yen 46,500/t FOB, according to sources, both prices being Yen 2,500/t lower.
Meanwhile, few inquiries have been heard from the regular overseas from Vietnam, South Korea or Taiwan, which are probably awaiting further drops in the Japanese scrap, according the Japanese market sources.
“However, we do not think the room for Japan’s scrap price declines will be much, as scrap demand has appeared firm and inquiries from the potential Chinese buyers has been rather active, which will support the Japanese scrap market sentiment,” the second trader added.
A China-based integrated mill was heard booking 3,000 tonnes of the Japanese HS material at $495/t CFR around January 13, much higher than the $460-470/t CFR targeted by the other Chinese buyers in the January 4-8 week, the Japanese sources shared.
Source:Mysteel Global
