Japan’s November scrap exports fall

Japanese ferrous scrap exports in November extended declines to the second lowest of the year, driven by a wide gap in domestic and export prices.

November exports fell by 6.7pc from October to 480,000t, taking January-November exports down by 21.2pc on year to 6.8mn t, Japan customs data showed.

South Korea remained the leading importer in November and was the only major buyer that registered year-on-year gains. South Korean mills preferred scrap from Japan as Korea's domestic scrap stood at relatively higher prices with insufficient supply.

Demand from Vietnam failed to pick up much as anticipated, on stagnant domestic steel sales under the effect of Covid, while Taiwanese buyers stayed on the market sidelines for Japanese scrap and chose US containerised scrap, which cost less.

Japanese traders expect export volumes to stay at current levels at least until January 2022, on sustained domestic demand. The au Jibun Bank Japan manufacturing purchasing managers' index in December inched down on the month to 54.2 but remained at around a three-year high.

The ratio of crude steel production ratio from electric arc furnace mills rose to the highest of the year at 27.4pc in November, supporting continuous domestic scrap consumption and preventing scrap flow to the export market. The Japan Iron and Steel Federation estimates that crude steel production in 2022 will maintain at a similar level as 2021.

Some Japanese traders thought export negotiations might be more active in January as more suppliers started to consider exporting, as domestic prices declined. Both Japanese domestic and export scrap prices have fallen since the middle of October given the weak seaborne steel market. Overseas buyers kept cutting target prices and Japanese buyers followed suit with lowering collection prices amid slower steel exports. The Argus H2 fob Japan assessment fell by 12.8pc to ¥47,500/t ($412/t) and HS fob Japan assessment fell by 17pc to ¥54,000/t, from 22 October to 24 December.