Ex-Japan scrap prices have continued to collapse, chiefly amid pressure of lower bids from customers. Specifically, the prevailing bearish sentiments in the global steel and raw material markets have encouraged importers, in particular, South Korean steelmakers to revise their purchase scrap prices downwards whenever possible. As the suppliers of prime grade scrap have continued to be more reluctant in giving discounts, citing the shortage of material, some customers have attempted to replace Japanese material with alternative feedstock, literally with pig iron as the closest counterpart.
In particular, SteelOrbis has learned of a “test” booking of 30,000 mt of ex-India basic pig iron (BPI), done by a South Korean steelmaker about ten days ago at $580/mt CFR, for shipment at the end of August-beginning of September. “That deal is beneficial not only because of price, but due to very peculiar payment conditions,” the supplier stated. The abovementioned price is around $20-25/mt lower than current levels for Japanese shindachi scrap. Specifically, the same South Korean steel producer has voiced its bids for ex-Japan shindachi scrap at JPY 66,000/mt ($600/mt) CFR, while bids for shredded scrap have been set at JPY 59,000/mt ($536/mt) CFR. The freight is assessed to be at around JPY 4,000/mt ($36/mt).
Meanwhile, on August 27 another South Korean mill Hyundai Steel has announced a further JPY 1,000/mt ($9/mt) cut in its bids for Japanese scrap. In particular, bids for H2 grade and shredded scrap have decreased to JPY 44,000/mt ($400/mt) FOB and JPY 54,000/mt ($490.6/mt) FOB, respectively. The new bid for H1/2 has been fixed at JPY 44,500/mt ($404/mt) FOB. The producer’s purchase prices for HS and shindachi grades stand now at JPY 57,000/mt ($518/mt) FOB and JPY 62,500/mt ($568/mt) FOB.
Concurrently, POSCO has settled its bid price for ex-Japan HS scrap at JPY 58,500/mt ($531.5mt) FOB. According to market sources, a lot of 10,000 mt of ex-Japan HS scrap has been sold to South Korea at above mentioned level, while a small tonnage of H2 has been traded at JPY 45,000/mt ($409mt) FOB. The highest bid for ex-Japan H2 has been heard from Daehan Steel at JPY 45,500/mt ($413mt) FOB, SteelOrbis has learned.
Meanwhile, a Vietnamese mill voiced its bids for ex-Japan H2 scrap at $465/mt CFR at the highest, down by $5/mt over the past week, taking into account the assessed freight at about $60/mt.
Having said that, SteelOrbis’ assessment for ex-Japan H2 scrap has dropped to JPY 44,000-45,500/mt ($400-413mt) FOB this week, from previous level JPY 45,500/mt ($410/mt) FOB.
Export activity for ex-Japan HS in China has continued to be constrained by the divergence of offers and bids. Specifically, Chinese steelmakers are seeking to purchase material at not higher than $520/mt CFR, while Japanese suppliers would hardly sell lower than $560/mt CFR, according to market sources.