Due to the monsoon season, Vietnamese buyers are showing little interest in scrap imports and the bids from mills are lower than the offered price levels. The Vietnamese scrap market is still characterized by softness and a further softening in prices is expected by market players.
SteelOrbis has learned that Japanese H2 scrap offers to Vietnam are currently at around $365-370/mt CFR. However, Vietnamese sources said that these levels are not workable for them right now and they are sharing bids at around $355-360/mt CFR, almost $10/mt lower than the offers voiced.
Offers for ex-US bulk HMS I/II 80:20 scrap are now at around $375-380/mt CFR Vietnam, SteelOrbis hears.
Meanwhile, the South Korean domestic scrap market has been weak for a very long time. One market source stated, “The price of rebar has gone below the production cost, so the mills have been trying to push the price at least above the production cost. Hence, they cut their production rates further this month.” A contact from a major South Korean producer added, “Capacity utilization rates in South Korea may have declined to 60 percent this month.” It is known that Hyundai Steel alone has cut production by 200,000 mt in July. As a result, the only scrap importer in South Korea remains POSCO, which procures higher grade scrap such as shredded from Japan “because their domestic suppliers do not have or generate that grade.” South Korea’s absence from the Asian scrap market is not expected to change in the short term.
On July 11, POSCO has shared bids for Japanese HS scrap at JPY 60,000/mt ($377/mt) CFR, JPY 1,000/mt or $11/mt higher than the Japanese yen-based bids shared by the producer for this grade on July 4. Meanwhile, POSCO’s bids for shredded scrap are at JPY 59,500/mt or $374/mt CFR. This level indicates FOB-based prices for Japanese shredded scrap are at around JPY 58,500/mt or $367/mt.
Considering the gap between ex-Japan shredded and H2 scrap prices at around JPY 3,000-4,000/mt, this means indications for ex-Japan H2 prices for South Korea are at JPY 54,500-55,500/mt FOB or $342-349/mt FOB.
