Large blast furnace (BF) mills in the country have boosted their intake of scrap recently - heavy scrap (HS) in particular - putting pressure on buyers overseas to match local steelmaker buy prices.
Key domestic buyer Tokyo Steel has raised its scrap prices at most plants three times in the past 10 days and is now paying ¥42,000 ($389) per tonne for H2 at its Utsunomiya works.
Chinese interest in imported cargoes of HS - the Japanese equivalent of plate and structural (P&S) grade scrap - has risen in recent days, with a major buyer in Vietnam also heard to be active in the market.
Fastmarkets’ weekly price assessment for steel scrap P&S, export, fob main port Japan, was ¥50,000-51,000 ($463-472) per tonne on Wednesday April 21, up by ¥1,000 per tonne from a week earlier.
Shindachi busheling, meanwhile, was sold to the domestic market at ¥49,500-50,000 per tonne, sources said, with offers for the grade in the export market at ¥49,000-51,000 per tonne fob.
Fastmarkets’ price assessment for steel scrap Shindachi, export, fob main port Japan, was ¥49,000-51,000 per tonne on Wednesday, widening up ¥1,000 per tonne week on week.
Local strength still restricting exports
Export activity has been limited by strong competition from the domestic market, sources said.
“Japanese scrap is probably the most expensive in the market right now, due to [good] local demand coming up to the Japanese Golden Week holiday and the incredible freight costs,” a Japanese supplier source said.
Japan's Golden Week public holiday runs from April 29 to May 5 this year.
“Mills in Japan are securing cargo before the long holidays and the domestic market is very strong,” a Japanese trading source said.
“I prefer to sell to the domestic market. Domestic vessel owners have not increased freight rates - the Japanese local freight market is flat,” he said, adding that he was still having great difficulty securing vessels for exports.
Freight rates from Japan to Vietnam were said to be $50-60 per tonne for a 5,000-tonne cargo on April 21.
“The fob Japan prices are getting very high. Recently, the US HMS price has become more competitive than Japanese cargoes, so workable prices - especially for Shindachi busheling - are getting high,” a second scrap trading source said.
Japanese mills are also enjoying strong prices for both rebar and billet in the export market.
“The rebar market is [strong] in Korea, but importers can’t get Chinese bar because it is too expensive, so they are having to buy from other origins such as Japan,” a South Korean steelmaker source said.
Lower-grade H2 was offered in bulk to the export market at ¥43,500-44,500 per tonne fob over the past week, depending on supplier, with bids at ¥41,000-41,500 per tonne fob from Vietnam. Traders said that prices of ¥43,000-44,000 per tonne fob would be required to get deals done.
H1:H2 (50:50) was offered to Taiwan at ¥44,000 per tonne fob earlier in the week.
With freight costs added, H2 offer prices would work out at around $480 per tonne cfr Bangladesh, which is too high for buyers to consider, a Bangladeshi steelmaker source said.
Fastmarkets’ price assessment for steel scrap H2, export, fob main port Japan, was ¥43,000-44,000 per tonne on Wednesday, unchanged week on week.
Shredded scrap in bulk was offered at ¥48,000-49,000 per tonne fob over the last week, while several trading sources said that workable prices would be ¥48,000-48,500 per tonne fob.
Fastmarkets' weekly price assessment for steel scrap shredded, export, fob main port Japan, was ¥48,000-48,500 per tonne fob on Wednesday, narrowing up by ¥1,000 per tonne week on week.
Prices for higher grades of steel scrap exported from Japan continued to increase over the past week, underpinned by a strong appetite in the domestic market, sources told Fastmarkets this week.