Solid demand for scrap from local steelmaking mills, stemming from the country's carbon neutral target, has caused Japanese scrap sellers to be relaxed in terms of export sales and has led to a sharp price rise. Nevertheless, foreign customers were gradually accepting higher prices for ex-Japan scrap to meet their procurement needs.
Specifically, having achieved JPY 51,000-51,500/mt ($459-463/mt) levels this week in their local H2 scrap sales, Japanese scrap sellers look set to start testing their export markets with offers at JPY 53,000-53,500/mt ($477-481/mt) FOB.
According to market sources, hardly any customer abroad is ready to accept such prices so far. For instance, the latest ex-Japan H2 scrap booking to Vietnam, where the highest demand for ex-Japan scrap has been seen lately compared to other destinations, has been heard at $500/mt CFR, up $10/mt over the past week. With the assumed freight rate at $50/mt from Japan to Vietnam, the FOB price is assessed at $450/mt FOB or around JPY 50,000-50,500/mt FOB.
Meanwhile, South Korean steelmakers have started gradually returning to the market after their national holidays. In particular, this week SeAH Steel has booked 5,000 mt of ex-Japan shredded scrap and a 2,000 mt lot of H1/H2 scrap at JPY 60,500/mt ($545/mt) CFR and at JPY 56,200/mt ($506/mt) CFR, respectively. According to SteelOrbis’ calculations, with the freight at around JPY 4,000/mt and the difference between H2 and H1/H2 prices at $10/mt, the tradable level for ex-Japan H2 in South Korea has reached JPY 51,000/mt FOB.
Afterwards, another South Korean steelmaker POSCO has been forced to increase its bid for ex-Japan shredded scrap by JPY 500/mt ($4.5/mt) from the previous level heard early this week to JPY 61,000/mt ($549.5/mt) CFR in order to obtain material. Meanwhile, the bid for HS scrap has been settled at JPY 64,000/mt ($576.5/mt) CFR.
Taking into account the abovementioned developments, the range of ex-Japan H2 scrap prices has risen to JPY 50,000-53,000/mt ($450-477/mt) FOB, with the high end of the range not yet having been achieved, but being mentioned as a target for future sales. This is a JPY 3,000-5,000/mt ($27-45/mt) price increase over the past week.