However, the steelmaker has recently concluded a contract for USA origin in bulk vessel comprising 48,000 MT of HMS 1 scrap at USD 349/MT, CFR South Korea. It is mostly because of expensive Japanese scrap offers as compared to USA scrap prices. According to sources, this contract may also result in preventing the continuously rising Japanese scrap prices.
On the other hand, the steelmaker is likely to continue purchasing high grade Japanese scrap through individual negotiations this week as the need for high grade scrap continues at different works of Hyundai Steel in South Korea.
Increasing scrap prices in Japan results in widening gap with USA bulk cargo offers -
Since past few weeks Japanese domestic scrap prices have turned strong amid increased purchases despite ongoing summer and stricter quality control measures. Over tightened circulation and fall in collection rates, sellers have raised price expectations to JPY 35,500-36,000/MT (USD 318-322) for H2 and at around JPY 40,500-41,000/MT (USD 364-368) for HS, FoB Japan. Last week, a deal for HS scrap concluded at JPY 43,000/MT (USD 385), CFR South Korea which is around USD 28-30/MT higher than the contract price of USA. HMS 1 scrap usually remains lower by USD 10-15/MT. Thus, price gap between USA and Japanese scrap has increased significantly.
Although Japanese scrap prices are higher as compared to global scrap prices it is really hard for Japanese seller to lower their prices. Domestic scrap prices in Japan stand at JPY 34,500-35,000/MT at Gulf region and JPY 35,500-36,000/MT at Kanto region which have already come in line with export offers and are likely to increase further in upcoming days.
On 22nd Jun’18, Hyundai Steel had presented bids for special grade H2 at Japanese Yen 33,000/MT (USD 297) on FoB Japan basis since then it remained unchanged for more than one months’ period over weakened demand for low grade scrap and H2. Although many offers were available from Japanese suppliers, it remained resisting high prices for H2 as it doesn’t need any new contract amid considerable inventories and available contracts.
Hyundai Steel is the largest buyer of Japanese scrap and imports monthly around 200,000-250,000 MT. Its import bidding is considered as a major indicator of the market direction in South East Asia. The steelmaker has already about 350,000 MT Japanese scrap contracts in hand. However, demand for high grade scrap still strong and likely to increase in upcoming days.
- Inputs from Steel Daily
