Japanese H2 scrap prices have declined again in the export market this week, with a small volume traded to South Korea. Major buyers have minimized purchases recently, waiting for further declines in the near future. But it seems that exporters will try to hold prices stable after the recent sharp drop. Some signs of weakening have started to appear in the local Japanese scrap market.
A small contract for 3,000 mt of H2 scrap has been closed at JPY 26,500/mt ($248/mt) CFR South Korea, which translated to JPY 24,500/mt ($229/mt) FOB. In the middle of June, suppliers were unwilling to give prices to South Korean customers below JPY 26,500/mt FOB. This means a sharp drop by almost $20/mt. Offers for H2 are still above JPY 25,000/mt ($234/mt) FOB, but “JPY 23,500-24,000/mt FOB is the necessary range to lure Asian buyers,” a trader said.
Some transactions for Japanese H1/2 50:50 to Taiwan have been concluded at $260/mt CFR this week, down by $7-10/mt from last week. Moreover, sources have reported that there were already negotiations at $255/mt CFR in the middle of the week.
Some further sharp declines in scrap prices in the export market are questionable at the moment. “Billet price does not fall as fast as scrap. I think the bottom is not so deep,” a source told SteelOrbis.
After the previous long-standing uptrend, on Wednesday, June 24, Tokyo Steel announced its first local scrap purchase price cut. Prices for H2 scrap has been lowered by JPY 500/mt ($4.7/mt) to JPY 26,000/mt ($244/mt) delivered to Utsunomiya plant, while prices for the other four assets have been left unchanged. Prices are effective from June 25.
