Japanese scrap buyers vie for domestic scrap with exporters amid stable demand

Japanese buyers are increasing their bids for ferrous scrap to prevent exports of the steelmaking raw material, hoping to feed domestic steel production amid solid demand and healthy margins

Major Japanese electric-arc furnace operator Tokyo Steel had increased its bids for domestic scrap again on Wednesday April 13 by ¥500-1,000 ($3.99-7.97) per tonne. It is now paying ¥65,500 per tonne at its Tahara, Okayama and Kyushu steel works, and ¥66,000 per tonne at its Utsunomiya works. It is also paying ¥64,500 per tonne at its Takamatsu steel works.

“It is unlikely that there will be any falls in domestic scrap prices in the near-term,” a Japanese trader told Fastmarkets on Tuesday.

The biggest overseas buyer now remains South Korea, Japanese traders said, with South Korean steelmakers still paying the highest for Japanese scrap compared with other traditional buyers such as Vietnam and Taiwan.

A major South Korean blast furnace-based steelmaker had bought around 40,000 tonnes of Japanese at its last tender, including H2 at ¥66,000 per tonne, shredded and heavy scrap at ¥71,500 per tonne, and Shindachi Bara at ¥73,500 per tonne.

However, offers increased after that due to the Kanto Tetsugen auction concluding higher on Tuesday. 10,000 tonnes of H2 was sold to a Japanese trader at ¥67,010 per tonne, an increase of ¥3,500 per tonne from March.

But this does not mean a higher price in US dollar terms, due to the weaker Japanese yen, which had fallen to 125.39 against the US dollar on Wednesday from 117.91 to a US dollar on March 15, according to Oanda.com.

A cargo of Japanese Shindachi Bara was sold to Vietnam at around $670 per tonne cfr last week, which is equivalent to around 74,000-74,500 per tonne fob.

Fastmarkets’ assessment for steel scrap H2 export, fob main port Japan, was ¥66,000-68,000 per tonne on Wednesday, widening upward by ¥1,000 per tonne from ¥66,000-67,000 per tonne a week earlier.

Offers to Taiwan, Vietnam fall

Offers for bulk Japanese H1&H2 (50:50) were at $590-595 per tonne cfr Taiwan, with a transaction heard concluded at $585 per tonne cfr Taiwan.

This is compared to containerized HMS 1&2 (80:20) scrap from the United States being sold at $555 per tonne cfr Taiwan on Wednesday after being offered at $560-563 per tonne cfr Taiwan.

This also means a narrowing of the bulk Japanese-containerized US-origin price spread to around $30 per tonne, compared with almost $40 per tonne previously.

Fastmarkets’ daily price assessment for containerized steel scrap, HMS 1&2 (80:20 mix), US material import, cfr main port Taiwan, was $555 per tonne on Wednesday, falling by $5-8 per tonne from the previous day.

In Vietnam, offers for bulk Japanese H2 were mixed, with some heard at $600 per tonne cfr and below, down from $605-610 per tonne cfr in the previous week, while others were heard at $605-610 per tonne cfr Vietnam.

Offers for bulk US-origin HMS 1&2 (80:20) had also fallen to $630 per tonne cfr Vietnam, compared with $630-640 per tonne cfr Vietnam in the previous week.

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