Transaction prices for Japanese scrap exports to regional buyers have fallen week-on-week. However, with Japanese traders now starting to pay slightly higher prices to collect scrap to fulfill existing June shipment orders, offer prices have rebounded, industry sources in Japan, Seoul and Vietnam said.
Platts assessed its weekly H2 scrap price at Yen 19,000-20,000/mt ($173-182/mt) FOB Tokyo Bay Wednesday, down Yen 1,000/mt from last week's assessment of Yen 20,000-21,000/mt FOB.
South Korea's Dongkuk made a purchase for H2 scrap at Yen 21,500/mt CFR Korea (equivalent to Yen 19,000/mt FOB) Tuesday, Seoul and Tokyo market sources said. It had tried to lower Japanese scrap prices further by bidding H2 last Friday at Yen 17,000/mt FOB, but it was not successful.
Japanese traders are currently targeting to export H2 at the minimum of Yen 20,000/mt FOB as they are paying around Yen 18,500/mt FAS to collect H2 material to be exported. Japanese traders had to raise their scrap collection prices from Yen 18,000/mt FAS late-last week because they were not able to attract sufficient scrap.
Last Thursday, leading South Korean EAF mill, Hyundai Steel, booked Japanese H2 material at Yen 19,500/mt FOB on May 26, down by Yen 3,500/mt from the bid on May 19, as reported.
"The recent downward trend in scrap prices appears to have reversed as Japanese trading companies are aiming to procure scrap for June shipment order," a Seoul-based trader said. He said that these traders had secured deals last month at much higher prices.
Japan's leading mini-mill, Tokyo Steel Manufacturing, last cut its scrap buying prices by Yen 500/mt for its Tahara works, central Japan for all grades effective from May 28 arrivals, but kept prices unchanged for other works and a steel service center. Tokyo Steel is currently paying Yen 18,500/mt truck delivered to its Utsunomiya works, north of Tokyo.
In South Korea, leading EAF mill Hyundai Steel announced Wednesday that it would advance the effective date for it to cut Incheon and Dangjin plants' buying prices of domestic scrap by KRW 10,000/mt ($9/mt) to June 4 from June 7 previously.
Korea Iron & Steel Co announced Wednesday to cut its buying prices for domestic scrap by KRW 20,000/mt ($17/mt) effective June 3 with an additional cut of KRW 20,000/mt effective June 8. The previous price for Korean H2 equivalent-grade scrap was prevailing at Won 280,000-290,000/mt last week.
Offer prices to Vietnam for H2 scrap were prevailing at $210-215/mt CFR, Offer prices have risen by $10-15/mt, a Hanoi trader said Wednesday. A H2 deal was heard last Friday at $212/mt CFR (equivalent to Yen 19,470/mt FOB).
Meanwhile, the market for heavy melting scrap imports into East Asia remained quiet with industry participants reporting they have not heard of offers nor bids. Regional scrap importers continued to prefer to defer any import buying because of the weakness in finished steel prices.
Without any action taking place in the bulk HMS market, traders say that it was hard to predict where prices are. However, they note that bulk HMS prices must fall in tandem with Japanese scrap, container scrap and Chinese billet prices.
A rumored deal for bulk HMS I/II 80:20 from West Coast US heard recently done at $220/mt CFR could not be confirmed with Korean trading sources.
Several traders said that a price of $220/mt CFR was possible based on the current market conditions.
"It is hard to predict where bulk HMS prices are," a Hanoi trader said Wednesday. But he thinks sellers are ready to sell bulk HMS I/II 80:20 at $220/mt CFR. He said that scrap suppliers had "no choice" because buying interest was very thin. Importing mills including those in Vietnam are buying more local scrap instead of procuring imports, he noted.
Another Vietnamese trader said that buyers are likely to be aiming to book at $220/mt CFR,. He said that there appears to be sufficient scrap for June shipment and since, Taiwanese containerized 80:20 scrap had fallen to around $190/mt CFR Taiwan, $220/mt CFR was "possible."
On Wednesday, Platts assessed East Asian bulk HMS I/II 80:20 scrap at $220-240/mt CFR, lower from than the previous week's $245-255mt CFR. The implied midpoint of $230/Mt CFR was $20/mt lower than the week before.
