South Korean steelmaker, Hyundai Steel has returned to the market for higher-grade Japanese scrap purchases after a long gap. With limited demand and lowered production, had kept the steelmaker away for the spot market for Japanese scrap for the last couple of months.

 

A short supply of higher-grade scrap amid the COVID-19 lockdowns forced Japanese scrap exporters to push up the premium for higher-grade scrap over low or medium grade scrap like #2 HMS, said traders.

 

Hyundai Steel bid JPY25,000/mt ($233/mt) fob Japan for HS scrap equivalent of P&S, shindachi and shindachi press. Hyundai has skipped bidding for Japanese medium and low-grade scrap like #2 HMS, shredded and mix H1:H2. The equivalent bids for #2 HMS for the steelmaker are around JPY22,500/mt fob Japan. 

 

“We have enough inventories for #2 HMS scrap, also, a lot of volumes through prior contracts are in the pipeline, thus, we preferred to skipped bids for low-grade scrap. The supply of higher grade doesn’t look very tight otherwise prices wouldn’t have dropped in the last two week’s,” said the steelmaker. 

 

The weekly Davis Index for Japanese #2 HMS scrap exports was at JPY26,500/mt fob Japan on June 17, which declined sharply by JPY4,000/mt to settled at JPY22,500/mt fob Japan on Wednesday.

 

The price gap between #2 HMS and shindachi scrap has narrowed to JPY2,500/mt against the usual levels of JPY6,000/mt with a sharp drop in purchases over the past few months. On the other hand, bids for #2 HMS dropped to JPY21,000-21,500/mt fas Japan last week. 

 

Japanese scrap prices have continued to move down. A recent deal for #2 HMS in small bulk cargoes closed at $240-245/mt cfr Vietnam.

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