Imported scrap prices in Asia extended their decline in the first half of July as inclement weather conditions stifled construction activity, creating further headwinds for domestic steel and raw material demand.
Imported containerised heavy melt scrap (HMS) 1/2 80:20 scrap prices into Taiwan tapered off in the first half of the month, falling $10/t cfr from the start of the month to $325/t on 15 July, Argus data show. Taiwanese steelmakers undergo the annual summer electricity restrictions that typically spans across May-October. To mitigate rising energy costs, local steelmakers typically cut production by 20-30pc, weighing on scrap demand.
While imported scrap prices have been steadily rising as a result of the US-Iran war, domestic rebar prices have also risen in tandem to its peak of 18,500 New Taiwan dollars/t in the week of 18-22 May, marking a two-year high. Since late May, bearish demand has pushed rebar prices lower, and the domestic rebar price fell to NT$17,000/t in the week of 13-17 July.
Vietnam
Imported scrap prices in Vietnam continued to trend lower during 1-15 July, as most mills remained on the sidelines because of sluggish steel demand during the monsoon season. The Argus HMS 1/2 80:20 cfr Vietnam assessment fell by a further $3/t to $377/t cfr over the period. The tradeable level for Japanese H2 also declined by around $5/t to $362-365/t cfr.
Vietnamese mills prioritised domestic scrap procurement and adopted a hand-to-mouth purchasing strategy for seaborne material, supported by ample arrivals of previously booked cargoes and lower scrap consumption.
Japan
Japan's ferrous scrap market softened in the first half of July, tracking the weaker July Kanto export tender, which fell by ¥1,998/t ($12.32/t) to ¥52,508/t fas (free alongside ship). The Argus H2 fob Japan assessment also declined by ¥900/t to ¥52,500/t over the same period.
Market participants expect to see further declines in Japanese scrap prices through July as overseas buying interest remains subdued during the rainy season, while domestic scrap consumption eases because of summer maintenance schedules at many electric-arc furnace (EAF) mills.
China mainland
Chinese domestic scrap prices remained under pressure during the first half of July as steel demand stayed weak on widespread rainy weather and production cuts at some EAF mills because of negative margins. The Argus heavy melt scrap (>6mm, excluding value-added tax) del East China assessment fell by 36 yuan/t ($5.32/t) to Yn2,177/t.
The Chinese scrap market began to show signs of stabilising this week as steel prices rebounded, prompting some mills to replenish low inventories.
