The Japanese ferrous scrap export market has bottomed out and prices have started to rebound, trading sources in Tokyo and Seoul said Wednesday.
Japanese scrap has gained competitiveness amid a weaker yen and Japanese scrap exports are being booked in higher yen-denominated prices, traders in Japan said.
S&P Global Platts assessed its weekly H2 scrap at Yen 18,500-19,000/mt ($174-179/mt) FOB Tokyo Bay Wednesday, up Yen 750/mt to the mid-point from last week's assessment at Yen 18,000/mt FOB.
A Korean mini-mill was widely heard to have booked Japanese H2-grade scrap at Yen 19,000/mt FOB Wednesday, trading sources in Seoul said.
This is Yen 1,000 higher than the H2 bid of Yen 18,000/mt FOB from South Korea's leading EAF mill, Hyundai Steel, on July 8. This was the most recent Japanese scrap purchase tender by the company as it skipped its tender last week.
Japanese traders said they were targeting exporting H2 at Yen 19,000-19,500 on the weakness of the yen. The Yen was hovering at around Yen 106 to the dollar Wednesday, from Yen 101-102 two weeks ago and Yen 104-105 a week ago.
But a Tokyo scrap trader said he believed Korean mills were in no rush to book Japanese H2 at the moment and will bid below offer prices. "No Japanese trader will accept any booking at Yen 18,000/mt FOB anymore, so we believe actual bookings will take place at around Yen 18,500-19,000/mt FOB," he said.
Hyundai Steel is currently not in any hurry to purchase Japanese scrap, sources close to the company said. The company has sufficient scrap cargoes due for arrival until the end of August and one US bulk scrap cargo due for August shipment was even postponed to September, sources said.
Nonetheless, the Korean mill was heard to have started collecting offers for Japanese scrap on Wednesday. Other Korean mini-mills are currently waiting for Hyundai's bid for its next tender which could take place on Friday, Platts was told.
"Currently, it is almost impossible to find any offers in the Yen 18,000/mt FOB range. Most offers are at the Yen 19,000/mt FOB or above," a Korean trader said.
Vietnamese customers were contacting Japanese traders Tuesday with bids for H2 material at $210/mt CFR (equivalent to around Yen 19,080/mt FOB), up $5/mt from their latest bid a week ago, but no deals took place, Japanese trading sources said.
In Japan, Japanese traders are currently paying Yen 17,000-17,500/mt FAS for H2 material to be exported out of eastern Japan, up Yen 500/mt from a week ago. But domestic mini-mills are planning to have a summer shutdown and they are not aggressively collecting scrap at the moment.
Japanese leading mini-mill Tokyo Steel Manufacturing has been holding its scrap buying prices since July 9 arrivals. H2 material truck-delivered to its Utsunomiya works, north of Tokyo, remains unchanged at Yen 18,000/mt. The Utsunomiya works are scheduled to have summer maintenance from July 25 to August 4, but the works will continue receiving scrap during the shutdown and pile scrap stocks.
In Korea, as reported, Hyundai Steel will begin its summer maintenance of electric arc furnaces at Pohang works from July 22, followed by EAFs at Incheon works from August.
Meanwhile, regional mills in East Asia were using domestic scrap instead of importing bulk US heavy melting scrap, trading and mill sources in Southeast Asia said. Many market participants report that the import market for bulk HMS scrap is silent and they have not heard of offers recently.
However, a trader in Taiwan said he heard recent new offers from the main US suppliers at $230-235/mt CFR Korea or Southeast Asia. "For the buyers, this price is too high," he said. The previous regional bulk booking took place at $225/mt CFR Korea HMS I. "The market is very quiet," the Taiwanese trader said.
Another Taiwanese trader said the scrap market in Taiwan was flat because the Taiwanese rebar market was weak.
A Thai mill manager said that his mill would be aiming to book bulk scrap around $175/mt CFR "in order to make it on par" with domestic prices. "Anyway, buying scrap from the US is not quite a good option due to shipment size and the long shipment time," he noted.
"Domestic scrap is cheaper than importing," a Thai trader said. He said scrap demand was depressed because "rebar sales are very bad in Thailand."
Domestic scrap is sufficient, a Singapore trader said. He said that domestic scrap was also cheaper, with HMS 70:30 scrap prevailing at the equivalent of around $175/mt delivered. More scrap was available in the region because regional steel mills were importing Chinese billet or rebar instead of operating their melting operations fully, he said.
"Steel buyers are buying smaller parcels because of volatility in steel prices," he said. As this was affecting the cash-flow for regional steel mills, mills were less inclined to book a bulk scrap cargo of around 30,000 mt.
Platts maintained its East Asian bulk HMS I/II 80:20 scrap assessment at $225-226/mt CFR Wednesday, with an implied midpoint of $225.50/mt.
