JAPAN STEEL SCRAP: Vessel problems keep lid on fob prices

Japan's export steel scrap market presented a mixed picture in the week to Thursday April 1, with rising steel prices in Asia colliding with continued difficulties in sourcing vessels at key Japanese ports, sources said.

Sales of 3sp steel billet from Indonesia hit $630 per tonne cfr China this week, driven by strong long steel demand in the Chinese market.

Vietnamese mills were heard offering billet at $630-635 per tonne cfr China. That is up from sales at $620 per tonne cfr from Vietnam last week, and further strengthens the billet-scrap margin at key Vietnamese mills.

The export environment has also been boosted by a drop in the value of the Japanese yen. The yen was trading at ¥110.69 to $1 on April 1, compared with ¥106.66 to $1 at the start of March.

“The Japanese yen is getting lower, which is an advantage for exporting, but the vessel situation is very complicated,” a Japanese trading source said.

He said that the cost to get a 3,000-tonne vessel of scrap from Japan’s Nagoya port to South Vietnam was $75 per tonne on Wednesday, which makes offer prices from this region largely uncompetitive in the Vietnam market.

As reported by Fastmarkets in recent weeks, fob-basis export prices from Japan are under pressure amid an oversupply at export yards caused by a lack of available ships to conclude existing orders.

Although cfr-denominated prices are rising in Vietnam and Taiwan, rising freight costs and low vessel availability, together with the export yard oversupply, continue to constrain fob Japan prices, sources said.

“The vessel situation is causing huge damage to our operations,” an exporter told Fastmarkets.

“Exporters are able to collect cheaper cargoes now, but space is limited, which is why some exporters have needed to close their doors to buying new material,” he said.

“In Tokyo Bay, there is usually 80,000-90,000 tonnes of scrap exported per week but right now it is only 40,000-50,000 tonnes,” he added.

Prices diverge
Prices for the base H2 grade moved up slightly over the last week amid a rise in offer and bid prices in the Vietnam market.

Bids from Vietnam were heard at $440-442 per tonne cfr for Japanese H2 on Wednesday, up from $435 per tonne cfr late last week. The new bid prices would work out at ¥42,000 per tonne fob, according to one trading source.

Meanwhile offers for the grade rose to ¥42,000-43,500 per tonne fob depending on supplier, sources said.

But deals were also heard closed at ¥40,000 per tonne fob to South Korea over the last week, with certain exporters in Japan unable to service the stronger Vietnam market- for which larger vessels are required.

Fastmarkets’ price assessment for steel scrap H2, export, fob main port Japan was ¥40,000-42,000 per tonne on Wednesday, widening up ¥1,000 per tonne from ¥40,000-41,000 per tonne a week earlier.

Offers for heavy scrap (HS) to China remained at ¥48,000 per tonne fob, but offers to other markets reduced slightly over the last week to ¥46,500-47,000 per tonne fob, sources said.

A South Korean steelmaker also purchased around 2,000 tonnes of HS at ¥45,000 per tonne fob late last week, Fastmarkets understands.

Fastmarkets’ weekly price assessment for steel scrap P&S, export, fob main port Japan, was ¥45,000-47,000 per tonne on Wednesday, down ¥1,500-2,000 per tonne from ¥47,000-48,500 per tonne last week.

Local demand boost
Shindachi busheling was on offer at ¥48,000 per tonne fob at the high end, according to one source, while a second trading source said that ¥47,000 per tonne fob was a fairer price for the material in the current market conditions.

Around 5,000 tonnes of Shindachi was heard sold to South Korea late last week at ¥45,000 per tonne fob.

A third Japanese trader said that suppliers were holding on to Shindachi and were waiting for higher prices before selling.

“The Japanese market will be stronger in April-May, so by holding material, suppliers may get higher prices,” the first trader said.

Fastmarkets heard last week that two large Japanese blast furnace (BF) mills will start to procure more HS from the domestic market from April.

The rise in high-grade scrap procurement at BFs in Japan may be a sign of things to come following a declaration from the Japan Iron & Steel Federation (JISF) that mills should use more scrap to reduce CO2 emissions.

Because of the lower sales price, Fastmarkets’ price assessment for steel scrap Shindachi, export, fob main port Japan, was ¥45,000-47,000 per tonne on Wednesday, down ¥1,500-2,000 per tonne from ¥47,000-48,500 per tonne last week.

Shredded offers in bulk were heard at ¥46,500-47,000 per tonne fob Japan, while deal for around 5,000 tonnes of shredded was heard closed at ¥44,000 per tonne fob.

Fastmarkets’ weekly price assessment for steel scrap shredded, export, fob main port Japan was ¥44,000-46,000 per tonne fob on Wednesday, up from ¥44,000 per tonne fob one week before.

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