Sliding US steel scrap prices undercut Japan’s offers in key Asian markets

Prices for United States-origin steel scrap were easily undercutting those for Japan-origin material in the markets of Taiwan and Vietnam this week, market sources told Fastmarkets on Wednesday May 4

Exporters in the US have been slashing their scrap offer prices to Asia over the past few weeks amid a weakening US local market and falling steel prices in Asia, reducing scrap demand. Bangladesh has been one market to pounce on lower bulk offers from the country in the past fortnight.

Meanwhile, the Japanese scrap market has been largely inactive this week for the celebration of the country’s Golden Week holidays, while relatively stable pricing from local buyers has stopped material from going into the export market at lower prices.

“The market is dropping sharply for US scrap, but the Japanese market is still holding because Tokyo Steel has a great appetite for May-shipment cargoes,” a Japanese supplier source said on Wednesday.

Taiwan market

Offers for containers of US-origin HMS 1&2 (80:20) were heard as low as $485-500 per tonne cfr Taiwan on Wednesday, with a deal heard done by a large mill in Taiwan at $490 per tonne cfr.

“If we don’t bid, prices will just keep going lower the next day,” a Taiwan mill source said on Wednesday. “The lowest offer today was $485 per tonne cfr Taiwan, and tomorrow I think deals could be done at $480 per tonne cfr.”

Offers at $485 per tonne cfr were not confirmed by trading sources in Japan and Taiwan, but they said on Wednesday that offers at $490-500 per tonne cfr were plentiful in the market.

Fastmarkets’ price assessment for containerized steel scrap, HMS 1&2 (80:20 mix), United States material import, cfr main port Taiwan, was $490-500 per tonne on May 4, falling by $10 per tonne from April 29 and down by $20-30 per tonne week on week.

Japanese offers for bulk H1:H2 (50:50) were most recently heard at the much higher price of $550 per tonne cfr Taiwan late last week.

Vietnam market

The pattern was similar in the Vietnam market, where offers for deep-sea HMS 1&2 (80:20) were heard to have fallen to $540-550 per tonne cfr on Wednesday, from $560-570 per tonne cfr on Friday last week, and down from $580-585 per tonne cfr one week before.

By comparison, a major Japanese trading source told Fastmarkets on Wednesday that his offer of bulk H2 to the Vietnam market late last week was $585-590 per tonne cfr, but it aroused no interest from buyers.

The lack of interest in steel scrap imports was unsurprising given that offers of 5sp steel billet from a major Vietnamese induction furnace (IF) mill had dropped to $745 per tonne cfr Manila earlier this week. Excluding freight cost and traders’ margin, that price would be equivalent to around $705-710 per tonne fob, Fastmarkets estimated.

A scrap-to-billet conversion cost of $150 per tonne meant that a theoretical break-even scrap price for mills would be $555-560 per tonne cfr Vietnam, if they could sell billet at these prices.

But billet sources pointed out that, with cheap Russia-origin billet being reported sold at around $700 per tonne cfr Philippines and $670 per tonne cfr China in the past fortnight, together with the disruption arising from the Philippines presidential election on May 9, closing billet deals would be very tough for Southeast Asian mills even at these reduced prices.

Fastmarkets’ price assessment for steel scrap H2 export, fob main port Japan, was ¥63,000-65,000 ($484-500) per tonne on Wednesday, unchanged week on week.

“H2 offers from Japan are still ¥65,000 per tonne fob, and HS at ¥70,000 per tonne fob,” a second Japanese trading source said, “but it is very difficult to sell at these levels because even domestic mills have stopped buying due to the sharp decrease in Turkish prices.”

Join Fastmarkets at the Singapore Steel Forum on May 18, an exclusive day during the Singapore International Ferrous Week 2022 (SIFW), when we will be taking a deep dive into recent developments and price trends in the Asian steel and metallics markets. Register today at https://events.fastmarkets.com/singapore-steel-forum

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