Japanese scrap prices have continued to be supported this week as local demand has remained good. For foreign customers, prices for lower grades of scrap like H2 or H1/2 Japanese scrap have been stable or have posted some small increase, while offers for higher grade scrap have visibly increased, but have not been accepted by customers.
The SteelOrbis reference price for ex-Japan H2 scrap has been at JPY 44,000-45,000/mt ($423-433/mt) FOB, unchanged since late December. This is the average price level, taking into account lower than expected deals to S. Korea and higher prices in some contracts to Southeast Asia.
The latest deals for H2 scrap from Japan have been closed in Vietnam at $465-475/mt CFR, which corresponds to JPY 45,700/mt FOB. This was the targeted level for exporters in late December and they have achieved it. “There were no bulk scrap bookings from the US [to Vietnam] as prices are too high,” a source said.
At least one deal for 10,000 mt of H2 scrap from Japan has been signed in S. Korea at JPY 43,000/mt ($414/mt) FOB. This price level is the lowest in the market so far. “Korean customers are bidding the lowest. Not many sellers can accept,” according to one Asian source.
Taiwanese customers have been purchasing H1/2 scrap at $460-465/mt CFR and Japanese exporters said that this level should be equivalent to around JPY 44,800-45,000/mt FOB for H2 grade scrap.
China has resumed purchases of Japanese scrap after its ban was lifted on January 1, but much lower local prices in China have prevented a boom in the market. According to different sources, at least four cargoes for HS grade Japanese scrap have been purchased in China since January 1 and the prices have been reported by sources from $470/mt CFR to $490-495/mt CFR in these trial deals. “China is not as aggressive [in purchases] as was expected, because international prices increased much and they are too high for local buyers,” a source told SteelOrbis.
By the end of the week, offers for ex-Japan HS have come up to as much as $510-515/mt CFR, while offers for shredded have been heard at $505/mt CFR to Southeast Asia and China. “Buyers in Southeast Asia are all waiting and observing the market after the holidays and so the price is just the target level, not reflecting the actual situation,” a Japanese seller said.