Japanese ferrous scrap exporters faced strong obstacles in this year's first half with stagnant scrap demand in southeast Asia and expensive collection prices in the domestic market. The country exported 488,000t of ferrous scrap in June, taking first-half exports to 3.14mn t, Japanese customs data show. Only exports to South Korea saw a year-on-year gain in the first half, driven by robust steel sales to the country across January-April. Exports to other major destinations dropped by 36-52pc with uncompetitive prices compared with offers from the US and Europe.
Crude steel production in Japan in June slipped by 8pc against a year earlier and is likely to stay subdued in July and August because of electricity shortages, summer maintenance and reduced steel demand in the domestic and export markets. Japanese steel mills kept domestic prices firm, opposing the falling trend in the global market that started in early April. The elevated steel product price dragged the manufacturing purchasing managers' index down to 52.1, the lowest level in 10 months, leading to reduced steel consumption and subsequent weaker demand for ferrous scrap. Japan's exports are expected to pick up from July onwards, as continuing price cuts in the domestic market since early May prompted trading firms to shift more supplies to the export market. The H2 price at the Tokyo Steel Utsunomiya plant plummeted by ¥25,500/t, or 38.3pc, over 4 May-28 July. Overseas buyers gradually entered negotiations after Japanese scrap export prices became attractive, despite the reduced demand because of weaker steel sales.