As per recent updates received from sources, ‘Kanto Tetsugen’- Japan’s monthly ferrous scrap export tender for Jun’19 has concluded today (11th June) in the Kanto region. Total 20,300 MT of H2 scrap has been auctioned in four winning bids presented at an average of JPY 28,967/MT (USD 267), FAS. Notably, this is the third successive monthly fall recorded in average bids by around USD 15/MT as prices have fallen total JPY 5,043/MT from the peak achieved at JPY 34,010/MT in Mar’19.
On monthly premises, average bid in Jun’19 has moved down sharply by JPY 1,630/MT (USD 15) against the average bid at JPY 30,597/MT (USD 282), FAS in May’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 winning bid fetched 5,200 MT of H2 at JPY 29,150/MT followed by 2nd, 3rd and 4th places each as JPY 29,150/MT for 5,000 MT, JPY 29,000/MT for 5,000 MT and JPY 28,550/MT for the remaining 5,100 MT respectively.
What can be inferred from Kanto’s result in Jun’19?
It was being expected that the average bid in Jun’19 would fall following a sharp correction in global scrap and weak domestic scrap prices in Japan.
Total volume auctioned in June remained above 20,000 MT as supply-side remain supportive. However, following today’s result, Japanese scrap prices are likely to fall further amid a lack of strong reasons to support the prices in the near future. Also, Japanese prices show no sign of bottoming on limited demand from the South Korean and Vietnamese importers.
Japan’s leading EAF steelmaker Tokyo steel lowered scrap purchase price on 1st June at 3 of its works. H2 price delivered at Utsunomiya plant in Kanto region has remained around 2 years low at JPY 29,000/MT (USD 267). EAF steelmakers in East Asia are likely to wait for Tokyo’s next price revision to have more clarity on the direction in the market following Kanto’s result.
South Korea’s largest importer Hyundai Steel skipped bidding for Japanese scrap since past a couple of weeks amid availability of sufficient inventories and domestic scrap supply at competitive prices. Hyundai’s last H2 scrap contract was heard to have concluded at JPY 30,000/MT, FoB.
USD/JPY exchange rate stands at 108.7 today, JPY appreciating by 1% in a months’ time against USD from 109.9 levels noted on 11th May’19.
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