Japanese domestic ferrous scrap prices are rising, but export bookings were stagnant during the week because of the price gap between Japanese traders and buyers, traders said Wednesday.
S&P Global Platts assessed that H2 scrap export price at Yen 28,500-29,000/mt ($251-$255/mt) FOB Tokyo Bay Wednesday, unchanged on the week.
South Korea's leading electric-arc furnace Hyundai Steel skipped placing its bid during the week of on February 20 for two consecutive weeks. The South Korean mill however booked some H2 material at Yen 28,000/mt via private negotiations, a source close to the company said.
Another South Korean mill Dongkuk Steel Mill placed its bid on Tuesday at Yen 30,000/mt CFR for H2, equivalent to Yen 27,500/mt FOB given its fixed freight cost of Yen 2,500/mt. However the South Korean mill was not able to book any due to resistance from Japanese suppliers, sources close to the company said.
Japanese traders are currently targeting Yen 29,000/mt FOB for H2 export, down from Yen 29,000-29,500/mt FOB a week earlier. "Actual booking was slower than we expected, but overseas scrap prices are still on an uptrend, and we haven't abandoned selling at Yen 29,500/mt FOB. The minimum for us is Yen 29,000/mt FOB because we are paying higher prices to collect scrap for export," a Tokyo-based scrap trader said.
Japanese traders are currently paying Yen 27,000-27,500/mt FAS to collect H2 material to be exported from eastern Japan, up Yen 500-1,000/mt from a week earlier.
As far as Japanese scrap exports to other regions excluding South Korea go, a Taiwanese mill booked Japanese H2 material at $278/mt CFR on Friday, equivalent to around Yen 28,600/mt FOB, traders said. Vietnamese mills are currently looking to book Japanese H2 at around $278-$280/mt CFR, $5 higher than its last booking two weeks earlier, but no contract has been confirmed. "Our offers to Vietnamese customers are around $290/mt CFR, and we cannot accept their low priced orders for now," another Tokyo-based scrap trader said.
In Japan, leading mini-mill, Tokyo Steel Manufacturing has lifted its scrap buying prices by Yen 500-1,000/mt for all grades at all works and a steel center effective from March 2 arrivals. This is company's third increase since February 22 arrivals. The company pays Yen 28,000/mt truck delivered to its Utsunomiya works, north of Tokyo. Other domestic mini-mills have also lifted their buying prices by Yen 500-1,000/mt during the week and trading sources in Tokyo said they expect other mini-mills will also follow Tokyo Steel and make additional increase on their scrap prices.
The heavy melting scrap market in East Asia was quiet, with no bookings, regional trading sources said.
Regional mills including South Korea and Vietnam are eying price movements before making any bookings due to rapidly increasing global scrap prices, they said.
"No sell, no buy due to high scrap inventories," a source from a Vietnamese mill said. "Offer prices remain the same from last week, but buying interests also remain at the same level," he added.
Currently, offer prices for bulk HMS I/II 80:20 are still prevailing at around $295-$305/mt CFR to East Asians mills unchanged from last week, sources said. Whereas, buying interests are lagging behind as regional mills are still eying to book at around $275-$280/mt CFR, Platts was told.
Trading sources in South Korea and Vietnam said mills had already secured enough scrap until April production or even May for some Vietnamese mills.
In South Korea, mills are still hesitant to book bulk HMS due to high offer prices, sources said. Instead, Hyundai Steel booked Russian A3 grade scrap at $279/mt CFR last week, up $7 from Dongkuk's booking at $272/mt CFR for the same grade two weeks ago, South Korean trading sources said.
"Mills are expected to be more active in purchasing scrap after the Kanto Tetsugen monthly scrap tender scheduled on March 9," a South Korean trading source said. "Mills will be able to get a clearer picture on further market movements after the tender," he added.
Total scrap inventories of South Korean EAFs still remain to hover at 1.141 million mt, unchanged from the previous week, trading sources said.
On Wednesday, Platts kept its East Asian bulk HMS I/II 80:20 ferrous scrap assessment at $285-$290/mt CFR with an implied midpoint of $287.50/mt CFR.
