Japan steel scrap exports slide on lower sales to China

Japan's ferrous scrap exports fell marginally in January-September, as increased shipments to south and southeast Asia were unable to offset declines in exports to China and South Korea.

Scrap exports fell by 1.6pc from a year earlier to 5.55mn t. Exports to China, which was previously a key buyer, fell by around 95pc to 37,852t while shipments to South Korea slipped by 3.6pc to 2.99mn t.

Exports to Vietnam increased by 25pc to 1.57mn t while shipments to Malaysia rose by 89.6pc to 135,744t. Exports to Bangladesh rose by 51pc to 167,882t. Exports to Taiwan, Indonesia and India also increased.

But exports to Vietnam may come under pressure from slower domestic demand for rebar, which will reduce the need for raw materials such as scrap. And increased supply of billet from Vietnam's largest steel producer Formosa Ha Tinh will reduce the need for scrap, as billet is a substitute for scrap as input in the electric arc furnace. Formosa has announced its billet prices will be unchanged in December and January to boost demand.

Taiwanese mills are also reducing imports from Japan as they buy lower-priced US scrap.

Overall demand for scrap in Asia will depend on whether mills are able to lift rebar prices, enabling them to increase production. Scrap prices seasonally increase in the last quarter of the year, but any continuation of slow rebar demand in Asia may prompt mills to drive a harder bargain on scrap prices and reduce import tonnages.

By Terry Chuay