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Japanese scrap exports decline in July

Posted on 02 September 2021

Japanese ferrous scrap export volume decreased in July on a volatile Chinese steel market and frozen demand in southeast Asia countries under Covid-19 lockdowns.

July exports fell by 20.1pc from June to 598,000t, taking January-July exports down by 14.5pc on the year to 4.8mn t, Japan customs data showed.

South Korea was the only market that saw gains in July with shipments higher by 3.2pc to 309,000t. South Korean scrap demand was robust this year, bolstered by strong demand from the shipbuilding and construction sectors. South Korean steelmakers chased the premium grade from Japan given healthy profits and stayed on the market sidelines when it came to obsolete scrap. The spread of Japanese H2 and HS fob prices widened from ¥6,000/t ($54/t) in early June to ¥13,500/t by 27 August, according to Argus assessments. Demand of premium grade is expected to remain sustainable as the global steel market eyes carbon neutralisation.

Exports to Vietnam declined by 36.7pc on the month in July. Vietnam was the biggest buyer in 2020 but scrap demand became muted since the end of June 2021 as lockdown measures set in. Vietnamese mills were less active in exporting billet compared to first half of the year, as the Chinese steel market fluctuated under policy uncertainties.

Japanese scrap exports to China halved from June given a significant price gap between Chinese domestic and imported scrap. Only premium grade ferrous scrap was allowed to be imported into China, which was also in high demand from Japanese and South Korean blast furnace mills. Chinese steelmakers were focused on domestic purchase as scrap prices were suppressed by anticipated production output cuts in the second half of the year.

As overseas demand shrank, more available scrap returned to the Japanese domestic market. Scrap prices in the domestic did not collapse as some market participants had as it received support from stronger output across steel mills on firm steel demand in the country. The au Jibun Bank Japan manufacturing purchasing managers' index stood at 53 in July, higher than pre-pandemic levels in 2019.

Source : Argus