As per recent updates received from sources, ‘Kanto Tetsugen’- Japan’s monthly ferrous scrap export tender for May’19 has concluded today in the Kanto region. Total 22,000 MT of H2 scrap has been auctioned in four winning bids presented at an average of JPY 30,597/MT (USD 279), FAS on 10th May’19. Notably, this is the second successive monthly fall recorded in average bids by around USD 15/MT.
On monthly premises, average bid in May’19 has moved down sharply by JPY 1,703/MT (USD 15.5) against the average bid at JPY 32,300/MT (USD 294), FAS in Apr’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 prices.
According to SteelDaily’s report, in today’s tender first two winning bids fetched 5,100 MT of H2 each at JPY 31,100/MT and JPY 30,560/MT, FAS followed by 3rd and 4th places fetched 5,000 MT H2 each at JPY 30,410/MT and JPY 30,310/MT, FAS while shipments are scheduled during 16th-21st May.
What can be inferred from Kanto’s result in May’19?
Total volume auctioned in May month has jumped to 22,000 MT against just 10,000 MT last month on improved demand amid low inventories with buyers as the supply had lessened during Golden week holidays (26th Apr-6th May). According to sources, participants were waiting for Kanto’s tender after returning from Golden week holidays. It was expected that the average bid in May’19 would fall following a sharp correction in global scrap and domestic scrap prices.
The equivalent FoB price of Kanto tender’s average bid stands at around JPY 31,597/MT, FoB, considerably higher by around JPY 1000/MT than the current market level in Kanto’s market.
Japan’s leading EAF steelmaker Tokyo steel’s H2 price delivered at Utsunomiya plant in Kanto region has already hit around 2 years low recently. The steelmaker observed a total fall of JPY 3,500-4,500/MT over the last 1 month period. The equivalent FoB price of the tender stands higher by around JPY 2,500/MT against Tokyo steel’s H2 purchase price which is presently at JYP 29,000/MT at Utsunomiya works.
South Korea’s largest importer Hyundai Steel’s bid for Japanese H2 before starting of Golden week holidays was reported at JPY 31,000/MT, FoB Japan which seems slightly lower than Kanto’s result.
Following tender’s result fetched above than expected, Japanese scrap prices may show recovery as many of the steelmakers with limited inventories in hand are expected to increase their purchases keeping prices supportive in the near terms. Thus, it seems that the price bottom of Japanese scrap has reached.
USD/JPY exchange rate stands at 109.7 today, JPY appreciating by 1.5-2% in a months’ time against USD from 111.7 levels noted on 11th Apr’19.
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