Japanese scrap exporters have been trying to limit offers this week and increase their prices, waiting for a firm rebounding trend in April in Asia and in the local market in Japan. However, for now transportation issues have been preventing FOB prices from recording any visible rise, SteelOrbis has learned from market sources on March 2.
The SteelOrbis reference price for ex-Japan H2 scrap has been at JPY 40,000-42,000/mt ($362-380/mt) FOB this week, with the upper end of the range adding JPY 1,000/mt ($9/mt) from last week. The lower end of the range corresponds to the latest small-volume sales to South Korea and it is in line with last week’s bids of Hyundai Steel. The higher end of the price range shows the lowest offer level. Higher bids for Japanese scrap from Vietnam have also positively affected market sentiment.
Sentiment in the scrap market in S. Korea has been weak and local scrap prices are still under pressure. Only a few small-volume deals for ex-Japan H2 scrap have been signed at JPY 40,000-41,000/mt ($362-371/mt) FOB over the past week.
The transportation issues affecting Japan’s scrap exports are still visibly hurting trading and suppliers have been in a hurry to fulfil their commitments under already-signed contracts. Market sources said that it is still extremely hard to find vessels and freight rates, especially for small volumes, have reached record highs. In particular, the freight from Japan to Vietnam for 2,000-3,000 mt of scrap has increased to $60/mt minimum, but is mostly above this, sources have said.
Additional pressure on exporters has come from the weaker Japanese yen rate. The exchange rate was $1 = JPY 106.7 on March 2, coming to $1 = JPY 110.4 on April 2. This has been preventing prices from recording any visible rise on FOB basis so far.
Overall, the situation in the import scrap market in Vietnam has improved as bid prices for ex-Japan H2 scrap have reached $440-445/mt CFR, compared to just $430-435/mt CFR last week. Though no fresh deals have been reported so far, this has been mainly attributed to the freight and transportation issues. Offers from Japan not below $450/mt CFR Vietnam have been rare.
Prices for ex-US HMS I/II 80:20 scrap by bulk to Vietnam have also improved. A deal was concluded at $442/mt CFR for shredded scrap last week, which translates to $437/mt CFR for HMS I/II 80:20. But this week, the tradable level has increased to $450-455/mt CFR for HMS I/II 80:20.
In the higher grade scrap segment, the situation has not improved much. One of the S. Korean suppliers has purchased a small batch of ex-Japan HS scrap at JPY 45,000/mt ($407/mt) FOB, which is in line with bids last week. This price level seems too low for most exporters. The lowest offers for this grade to China have been heard at $485/mt CFR and some sources have already started to ask for $500/mt CFR, seeing some improvement in the local market and China, and hoping for a demand revival, though bids from China are still very low and not above $450-460/mt CFR for HS.
Prices for local scrap in Japan have been stable this week, but most sources agree that the gradually rising demand and the better situation in the construction steel market will push prices up in April.