Ex-Japan scrap prices continue to fall, further drop possible due to local output cuts

Thursday, 24 November 2022 14:49:14 (GMT+3)   |   Istanbul
       

Prices for ex-Japan scrap have decreased again this week amid still limited demand in the region and the pressure from the local steel production cuts expected until March 2023, SteelOrbis has learned from the market on November 24.

Lately, the only more or less active destination for scrap trading has been Taiwan. Japanese suppliers were offering H1/2 scrap to Taiwan at $345-355/mt CFR early this week, and one deal was confirmed at $345-350/mt CFR on Wednesday. The next bids are expected to be lower by a further $5/mt. Taking into account freight and some extras for H1/2 grade, this latest deal would hardly be above $305/mt or JPY 43,100/mt FOB for H2 grade scrap.

Vietnamese customers are still inactive, give the sharp decrease in steel demand and the lack of expectations for the situation to improve in the near future. Ex-Japan offers for H2 scrap to Vietnam have been reported at $370-380/mt CFR, down by $5/mt on average from $380/mt CFR last week. This price translates to JPY 45,200-46,600/mt FOB, and has been assessed as not being workable for now.

South Korean importers are still silent and have not released any new official bids for Japanese H2 scrap, but since local prices in the country have continued to go down, the level in negotiations would hardly be above JPY 45,000/mt ($318/mt) FOB, according to sources.

Despite the recent rebound seen in the Turkish market, there have been no positive expectations for price movements in the Japanese export market as demand is expected to be reduced during the winter months in Japan. “I guess Tokyo Steel will cut local prices by JPY 500-1,000/mt every week for a while. Due to electricity shortages during winter, some EAF mills in the Kanto area will cut production in January-February 2023, and so they are lowering scrap procurements,” a local trader said.

The SteelOrbis reference prices for ex-Japan H2 scrap have come to JPY 43,100-45,900/mt ($305-325/mt) FOB with the midpoint at JPY 44,500/mt ($315/mt) FOB, while the lower end of the range has been lowered by JPY 1,900/mt over the past week, while the higher end has lost JPY 2,600/mt. The dollar equivalent of prices has decreased by $18-23/mt over the past week, taking into account the currency fluctuations.

$1 = JPY 141.38


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