Japanese scrap export prices rose during the past week on tight and a stronger Yen, trading sources in Japan said Wednesday.
But the East Asian bulk ferrous heavy melting scrap (HMS) market nudged downwards after an import booking to South Korea concluded lower compared to a previous deal last month.
Platts assessed its weekly H2 scrap price at Yen 17,300-17,500/mt ($152-154/mt) FOB Tokyo Bay Wednesday, up Yen 300-500/mt from last week's Yen 17,000/mt.
South Korean mills resumed their scrap buying after the Lunar New Year holiday, Japanese trading sources said.
Two South Korean mills booked Japanese H2 material for March shipment at Yen 17,300-17,500/mt FOB on Tuesday. Daehan Steel was heard to have purchased 9,000-10,000 mt and Korea Iron & Steel Co around 5,000 mt, at this price level, Japanese traders said.
Japanese traders are currently aiming to sell Japanese H2 scrap at Yen 17,500 mt FOB and above, Yen 500/mt higher on the week because scrap supply for export was limited and also, due to the appreciating Yen, trading sources said.
South Korea's Hyundai Steel booked on Monday this week one bulk HMS cargo for March shipment and April arrival from a US supplier at $179/mt CFR HMS I basis. The secured cargo exceeded 40,000 mt, a regional trader said Wednesday. The last Korean HMS I booking closed at $185.50/mt CFR in the last week of January.
This week, US bulk HMS 80:20 scrap was heard offered at $185/mt CFR Malaysia but there were no takers, mill managers and traders reported. Mills in Malaysia and Singapore are turning to domestic scrap instead because domestic scrap prices are more competitive than imports.
A Singapore trader said local HMS 70:30 scrap, at SGD 190/mt ($135/mt) delivered, was cheaper compared to US-origin HMS scrap. He added that there was sufficient scrap in the region because regional EAF mills were still importing rebar and billet from China.
Platts assessed East Asian bulk HMS I/II 80:20 scrap on Wednesday at $179-184/mt CFR, down from $180-186/mt CFR the week before. The implied midpoint of $181.5/mt CFR is $1.50 lower on the week.
After Hyundai secured the bulk HMS cargo on Monday, it made a bid for Japanese H2 scrap on Wednesday at Yen 16,500/mt FOB and Yen 17,000/mt FOB for contracts over 6,000 mt. As these bid prices fall below Japanese traders' target sales prices, Japanese trading sources do not think the Korean mill would get much Japanese scrap at its bid prices.
"We heard Hyundai received offers totaling around 70,000 mt by Wednesday, but many offers were at around Yen 18,000-18,500/mt FOB," a Tokyo trader said.
Other overseas buyers are also resisting higher Japanese scrap prices.
"We believe that the booking of Japanese scrap will become slower because of increased difficulties in getting buyers to accept our higher target (export prices) due to the Yen appreciation," a Tokyo-based scrap trader said. The Japanese scrap export business to other Asian customers such as Vietnam and Taiwan was still quiet. Japanese traders lifted their offers to Vietnamese customers to $185-190/mt CFR for H2, which is higher than previous contracts concluded at $173-175/mt CFR for H2 three weeks ago.
Offers for H2 at $180/mt CFR Vietnam were available until late last week but most Japanese suppliers now want to supply H2 scrap at $190/mt CFR now in line with the recent Korean booking price of Yen 17,500/mt FOB this week, a Tokyo trader said.
There are no takers for Japanese scrap, Vietnamese trading sources said.
"It is very quiet because Japanese scrap prices rose," a Vietnamese trader said. He believed Vietnamese buyers would substitute for other origin scrap if Japanese scrap prices remained high.
In Japan, traders continue to collect scrap aggressively for loading on vessels for export. They are currently paying Yen 15,500-16,000/mt free alongside ship (FAS), up Yen 500/mt from last week. As active loading is expected to continue for several more weeks, some traders expect FAS prices to rise even further, especially as some offers have already risen at Yen 16,300/mt FAS.
This week, Tokyo Steel Manufacturing, Japan's leading mini-mill, raised its scrap buying prices by Yen 500/mt effective February 16 at its Utsunomiya steelworks, north of Tokyo, but held prices for its four other steelworks. Its H2 buying prices at its Utsunomiya works was now Yen 16,500/mt.
Tokyo Steel hiked its domestic scrap prices in order to ensure sufficient scrap deliveries to its mill on strong demand for scrap for export, traders said.
While certain domestic mills in Japan followed suit and raised their domestic scrap purchase prices, others did not. Trading sources said the latter mills probably were still operating at low production levels on weak domestic steel demand.
