Japanese ferrous scrap exports in October rose to a record high led by strong demand from Vietnamese mills. In October, scrap exports to Bangladesh rose by 48pc as mills rushed to secure materials amid rising steel demand post a slumped due to the pandemic. October shipments attribute to bookings done mainly in August and September. Major export destinations like Vietnam, South Korea, Taiwan registered a rise in volumes against September except for Malaysia.
In October, Japanese ferrous scrap exports rose to 921,425mt, up by 23pc from 747,240mt in September and surged by 35pc from 681,497mt in October 2019, as per Davis Index analysis of customs data.
| Japan’s ferrous scrap export in October (mt) | |||||||
|---|---|---|---|---|---|---|---|
| Destination | Oct’20 | Sep’20 | % Change MoM | Oct’19 | (Jan-Oct)’20 | (Jan-Oct)’19 | % Change YoY |
| Vietnam | 3,65,690 | 2,70,912 | 35 | 1,96,467 | 28,00,030 | 17,67,778 | 58 |
| South Korea | 2,85,542 | 2,51,802 | 13 | 3,53,586 | 25,21,676 | 33,54,023 | -25 |
| Bangladesh | 1,53,959 | 1,04,266 | 48 | 34,608 | 7,34,212 | 2,02,490 | 263 |
| Taiwan | 53,659 | 48,566 | 10 | 37,640 | 10,09,927 | 4,85,167 | 108 |
| Malaysia | 26,474 | 37,596 | -30 | 24,661 | 5,14,668 | 1,59,854 | 222 |
| Others | 36,101 | 34,097 | 6 | 34,536 | 3,70,649 | 2,56,760 | 44 |
| Total | 9,21,425 | 7,47,240 | 23 | 6,81,497 | 79,51,162 | 62,26,072 | 28 |
Vietnam was the largest importer of Japanese scrap, importing the highest volumes driven by strong finished steel demand both in the domestic and the export markets. Scrap exports to Vietnam rose by 35pc to 365,390mt in October
South Korea imported 285,542mt in October, up by 13pc from the prior month. Many steel mills with low inventories resumed trades for imported scrap from Japan when prices were competitive against the global levels.
Share of Bangladeshi ferrous scrap imports rose by 48pc as major mills like BSRM and GPH actively bought Japanese small bulk cargoes. Productions ramps forced Bangladeshi mills to restock scrap in the second half of 2020.
Gateway to China
Allowance of ferrous scrap imports into China could lift prices, while on the other hand, tight supply of scrap globally and growing domestic demand, might slow Japanese ferrous exports in November and December, believe market participants. Chinese authorities are expected to announce and implement new standardisation for ferrous scrap, effective Jan 1, which could increase the price competition between Asian countries.
Chinese appetite for ferrous scrap is pegged as high as 8-10mn mt annually. With the largest exporter US less inclined to offer ferrous scrap to China amid US-China trade tensions, Chinese buyers are expected to source scrap from Japan. Davis Index heard Chinese buyers inquiring for Japanese scrap this week.
Japanese steelmakers raised domestic scrap procurement prices in November. Tokyo Steel announced nine successive hikes pushing #2 HMS price by JPY5,000/mt ($47.80/mt) to JPY32,000/mt delivered over the period. Many mills like JFE and Nippon have reignited blast furnaces boosting the consumption of iron ore and ferrous scrap in the country.