With the commencement of maintenance works at Japanese steel mills in the coming few months, which will reduce demand for basic scrap grades, and given the falling bids in Asia, ex-Japan H2 prices have come down, moving in an opposite direction to the higher grade scrap prices.
“We may expect the spread between H2 and premium cargoes to widen further soon,” one Japan-based source commented with regard to the current situation in the segment. Prices for shindachi and HS have been supported by strong demand in S. Korea and not very high allocations. Meanwhile, key customers abroad have also started to voice lower bids for ex-Japan H2 scrap, exerting pressure on Japanese suppliers.
Accordingly, Dongkuk Steel, one of the major buyers in S. Korea, hash set its bid for ex-Japan H2 scrap at JPY 48,000/mt ($432/mt) FOB, down by JPY 1,000/mt ($9/mt) compared to the previous price level, sources have said.
In the meantime, Vietnamese buyers have also decreased their price ideas for ex-Japan H2 by $5-10/mt within the past week to $480-485/mt CFR, which corresponds to hardly above JPY 47,000-47,500/mt ($423-428/mt) FOB, SteelOrbis has learned.
On balance, taking into account the abovementioned developments, the reference price for ex-Japan H2 scrap has moved down by JPY 1,000/mt ($9/mt) over the past week to JPY 48,000-50,000/mt ($432-450/mt) FOB.
As reported previously, last week, ex-Japan shindachi grade scrap was sold to South Korea at JPY 62,000-62,500/mt ($558-563/mt) FOB and HS scrap at JPY 59,000/mt ($531/mt) FOB.