The bearish outlook in the global scrap market has continued to encourage both Japanese and South Korean steelmakers to cut their bids for scrap. Although the situation in the prime grade segment has remained more favourable, in particular for export schindachi scrap, softening demand in South Korea and in the local Japanese market have forced suppliers to cut prices.
Accordingly, by the end of the current week the main EAF-based steel producer in Japan, Tokyo Steel, has revised its purchase scrap prices downwards for the second consecutive time during this week. The company has announced a decrease in its price for H2 scrap for all its plants by JPY 500/mt ($4.6/mt). On balance, the new H2 prices are in the range of JPY 48,500-50,000/mt ($442-456/mt). At the same time, the company has reduced its scrap purchase prices for shindachi scrap by JPY 500/mt ($4.6/mt) at three of its five plants, except for the Tahara and Okayama plants. As a result, the new local shindachi scrap prices have been fixed at JPY 50,500-55,000/mt ($460-501/mt), with the highest end valid for the Tahara plant. All prices are delivered and effective from August 7.
Meanwhile, foreign customers of ex-Japan scrap are becoming more insistent in their efforts to reduce prices. In particular, this week major South Korean mill Hyundai Steel has lowered its bid for ex-Japan H2 scrap by JPY 1,500/mt ($14/mt) to JPY 45,500/mt ($415/mt) FOB. “Basically, the tonnage that Hyundai can buy at the declared prices is doubtful. Taking into account the price for H2, which Japanese mills are ready to accept, I am not sure who wants to sell to South Korea now,” the main trader from Japan stated.
Having said that, SteelOrbis’ assessment for ex-Japan H2 scrap has dropped to JPY 45,500/mt ($415/mt) FOB, down by JPY 2,000/mt ($18/mt) over the past week.
Concurrently, Hyundai Steel lowered its price ideas for ex-Japan shredded scrap and for HS scrap by JPY 1,500/mt ($14/mt) within the past week, to JPY 55,500/mt ($506/mt) and JPY 58,500/mt ($533/mt), respectively. For shindachi scrap, Hyundai Steel is said to have left its bid at JPY 64,000/mt ($583/mt) FOB. “As prices are mostly expected to move down in the near term, Japanese suppliers are grasping their opportunities to sell prime grade material to South Korea in order to fix a profit,” the trader commented.
Meanwhile, scrap exports to China have remained unattractive, with most bids for ex-Japan HS hardly reaching $540/mt CFR, at least $50/mt lower than the prices targeted by suppliers.