Kanto Tetsugen’- Japan’s monthly ferrous scrap export tender for Oct’19 was concluded today (9th Oct’19) in the Kanto region. Total of 21,100 MT of Japanese H2 scrap was awarded at an average of JPY 22,293 /MT (USD 208), FAS, as compared to JPY 24,849/MT in Sept 2019, witnessing another sharp fall by JPY 2,556/MT (USD 24) on a monthly basis, SteelMint learned from market participants.
Monthly around 20,000-25000 MT of H2 scrap is auctioned through this tender. Notably, the FoB prices for the same are higher by around USD 9-10/MT than FAS prices.
As the domestic Japanese scrap market has been in a ceaseless downtrend since the last 6 months, this is the 7th straight fall witnessed in the average bids on a monthly basis. The bids have declined by around JPY 11,717/MT (USD 109) in total since Mar’19, falling significantly by 35% during this period.
What can be inferred from Kanto’s result in Oct’19?
As the domestic scrap prices in Japan witnessed consistent drop all through the Sep’19, declining by around JPY 2000/MT since the last month’s tender, the drop in winning bid was on expected lines, however the steep decline for another month suggests that the downtrend in the Japanese market is expected to continue for the short term.
Export offers of Japanese scrap to overseas buyers also declined sharply in Sep’19. Major South Korean steelmaker Hyundai steel reduced its purchase bid for Japanese scrap sharply by JPY 3000/MT in the last month, with the current bid for H2 standing at JPY 24,000/MT, FoB with few other steelmakers also booking Japanese scrap at lowered prices. Offers of export to Vietnam also dropped significantly over the last month.
The Japanese Yen stood mostly stable in Sep’19, at around 107 levels against USD after observing sharp volatility in the previous 6 months when the currency moved back-and-forth between 106-112 levels against US Dollar, while the stable currency can boost the confidence of the overseas buyers, giving a push to the export volumes.
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