Prices for scrap have started to lose ground in the major Asian import markets like S. Korea, Vietnam and Taiwan this week, impacted by the rapid downtrend in the steel market in China. Market participants believe that prices will go down more next week, SteelOrbis has learned.
Hyundai Steel cuts bids for Japanese scrap
On May 20, the major billet importer in South Korea Hyundai Steel announced its decision to cut bids for Japanese scrap by JPY 1,000/mt ($9/mt) this week. As a result, the new price level from Hyundai Steel for H2 scrap is at JPY 49,000/mt ($451/mt) FOB. Its prices for shredded, HS and shindachi have come to JPY 53,000/mt ($487/mt) FOB, JPY 54,000/mt ($496/mt) FOB and JPY 55,000/mt ($506/mt) FOB, respectively. Though the final volume, booked by the mill from Japan has not been confirmed by the time of publication, sources have said that it was not small.
Overall demand has been healthy in South Korea. A contract for ex-Russia A3 scrap has been rumoured at $510/mt CFR, but this could not be confirmed so far. The previous tradable level for ex-US HMS I scrap to S. Korea was estimated at $525/mt CFR, but now it ha sslipped to $515-520/mt CFR.
The major reasons behind the price trend change were the falling Chinese market and the slowdown of demand for scrap in Asia. “The market [of scrap] is very sensitive to what is going on in China,” an Asian source said.
The SteelOrbis reference price for H2 scrap from Japan has been lowered by JPY 1,000-1,500/mt ($9-14/mt) over the past week to JPY 48,500-49,000/mt ($446-451/mt) FOB.
Vietnamese buyers refrain from purchases as prices ease from peak
Offers for ex-Japan H2 scrap have slipped from $530/mt CFR Vietnam early this week to $510/mt CFR, reflecting the weakness in the market. Last week, deals were signed at $510-520/mt CFR, but no deals have been reported so far as most buyers have withdrawn their bids and have been waiting for prices to go below $500/mt CFR market for H2. “Billet prices have dropped very sharply, so scrap has needed to adjust too,” a trader said.
Last week, a deal for ex-US scrap by bulk was reported at $530/mt CFR to Vietnam. But since then bid prices have started to decline and the tradable level for HMS I/II 80:20 is not above $515/mt CFR at the moment, according to sources.
Number of offers higher in Taiwan, tradable level down
Early this week, most major suppliers were still bullish and deals for ex-US HMS I/II 80:20 in containers reached $475-485/mt CFR, up from the level of $470-475/mt CFR late last week. But following sharp drops in China, the sentiment has eased and more offers have started to come to Taiwan. On Friday, May 21, the tradable price level for ex-US HMS I/II 80:20 has come to $465-470/mt CFR. “Buyera are waiting now, as this is only a beginning of the falling,” a steel producer said.
Japanese suppliers have also been forced to cut prices - by $15-20/mt this week. New offers for H1/2 50:50 scrap by bulk are at $495/mt CFR. “Though the local market [in Japan] is firm, the downturn in the Asian market is obvious,” a source said.