As per recent updates received from sources, ‘Kanto Tetsugen’- Japan’s monthly ferrous scrap export tender for Feb’19 concluded today (13th Feb) in the Kanto region. Total 20,000 MT H2 scrap has been auctioned in four winning bids presented at an average of JPY 31,855/MT (USD 288), FAS in Feb’19.
On monthly premises, average bid recorded in Feb’19 has moved up sharply by JPY 3,080/MT (USD 28) against the average bid at JPY 28,775/MT (USD 266), FAS in Jan’19. Monthly around 20,000 MT of H2 is auctioned through this tender. Also, it is to be noted that FoB prices for the same are higher by around USD 9-10/MT than FAS (free alongside ship) prices.
In today’s tender, the first winning bid fetched 5,000 MT of H2 at JPY 32,005/MT, FAS, followed by 2nd, 3rd and 4th places fetched 5,000 MT H2 each at JPY 31,905/MT, JPY 31,805/MT and JPY 31,705/MT, FAS respectively.
What can we infer from Kanto Tender results?
According to sources, participants were already expecting that the average bid in Feb’19 would jump following a sharp recovery in scrap prices in Turkey and Vietnam. However South Korean importers remained on sidelines amid high inventories.
The average bid recorded today in Kanto’s tender stands around JPY 1,500-2,000/MT higher than the current purchase levels of steelmakers in the Kanto market. The equivalent FoB price for the same stands at around JPY 32,855/MT, FoB Japan. Which is higher by around JPY 4,000-4,500/MT (USD 36-40) as against the last contract awarded to South Korean steelmaker at JPY 28,500/MT, FoB in closing Jan’19.
Following tender’s result fetched above than expected, the price gap between Japanese sellers’ price expectations and South Korean steelmakers’ bids is expected to increase further for time being.
Japan’s leading EAF steelmaker Tokyo Steel kept scrap prices unchanged since 8th Jan’19 amid annual maintenance activities at its plants. Kanto’s average bid is higher by around JPY 2,500-3,000/MT against Tokyo steel’s H2 purchase price at Utsunomiya work at JYP 31,000/MT in the Kanto region. Japanese domestic scrap purchase prices are likely to increase in the near terms.
JPY depreciated by around 2-2.5% against USD in a month’s time. USD/JPY exchange rate stands at 110.6 today which was at around 108.1 levels on 13th Jan’19. This could have put some pressure on export offers in Japan.
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