Scrap prices in the Asian market have increased further this week as Japanese suppliers have decided to increase offers sharply, while supply volumes from the US have remained limited. Major buyers, in Taiwan and Vietnam in particular, have gradually been accepting increases, while demand from South Korea has been slack.
Japanese exporters keep high offers after Kanto tender
The Kanto Tetsugen export tender was closed in the middle of this week with a $36/mt increase compared to the auction last month. Subsequently, Japanese exporters have increased offer prices for H2 scrap to JPY 26,500-27,000/mt FOB, which is JPY 1,000-2,000/mt ($9-17/mt) above last week’s level. Many buyers have decided to wait for some time to see the further development of the market, but some deals have been concluded at the lower end of the range. “After the tender, buyers are taking time to look at the market direction,” a Japanese trade said.
Exporters have been supported by still somewhat limited offer volumes from other sources and the stronger local market. This week, Tokyo Steel announced local purchase price increases three times. The last one was announced today, June 12, when prices for three assets of the company were increased by JPY 500-1,000/mt ($4.6-9.3/mt). The highest level was settled for Utsunomiya at JPY 26,500/mt ($247/mt), up by JPY 1,000/mt from the level seen on Wednesday. As a result, since last week scrap purchase prices at different plants of Tokyo Steel have added JPY 1,000-3,500/mt ($9.3-32.6/mt) depending on the factory.
Taiwanese importers have to accept hike of at least $10/mt this week
New deals for ex-US HMS I/II 80:20 in containers have been concluded at $250/mt CFR in Taiwan late this week, which is $10-12/mt higher than contracts last week. Taiwanese customers have been willing to purchase from the US and it is most probable bids will increase to $250-255/mt CFR early next week. The much faster increase of prices from Japan have pushed importers to look for more supplies from the US, but the offer volume from this country is still limited.
Offers for ex-Japan H1/2 50:50 by bulk have added $10-15/mt compared to the highest level last week to $275-280/mt CFR Taiwan. Early this week, a contract for this grade of scrap was signed at $270/mt CFR, but then offers have increased further and customers have decided to wait, viewing this level as being too high. “Japanese scrap prices have increased very fast and I believe that next week prices for US scrap will go up by $5/mt more,” one of Taiwan-based importers said.
South Korean producers not ready to import big volumes
South Korean steelmakers have not reacted to the recent Japanese price increase and there have been no reports of any bids. Mills have not been ready to import any big volumes, taking into account lower steel production due to falling demand.
The main focus of steelmakers has been on scrap purchases in the local market. Also, some small tonnages of ex-Russia A3 scrap have been traded at $258/mt CFR South Korea, up $4-8/mt compared to the previous transactions reported last week.
Vietnamese importers keep booking Japanese scrap, demand slows down
The latest deals for H2 scrap have been signed in southern Vietnam at $275-280/mt CFR, signalling an increase of $15-20/mt compared to the contracts reported last week. Offers have been mainly at $280/mt CFR south Vietnam and above late this week. A deal to the north was signed at $280/mt CFR, while offers have increased to at least $285/mt CFR. Sources have said that such a sharp increase has been caused by the Kanto tender results, but overall buying has been much lower late in the week.
Offers for HMS I/II 80:20 have jumped to $285-290/mt CFR, while the tradable value was at $270-275/mt CFR Vietnam last week. The previous big bulk deal from the US was done at $268/mt CFR about two weeks ago. Sources have said that a further scrap price increase is questionable as “the finished steel market declined this week and it is hard for EAF producers to buy expensive scrap.”