Japan: Bids in Kanto scrap export tender fall in Oct’20; outlook mixed

• Bids in Kanto scrap export tender for Oct’20 fell by $9 m-o-m
• Ongoing Japanese scrap export price levels lower than Kanto bids
• Tokyo Steel’s scrap purchase price unchanged since 15 Sept’20

Kanto Tetsugen – Japan’s monthly ferrous scrap export tender for Oct’20 has concluded today. A total of 20,500 t of Japanese H2 scrap was sold at an average price of JPY 28,406/t ($268) FAS basis, SteelMint learnt from its reliable sources. Interestingly, both the cargoes have been booked by Vietnamese buyers, in lots of 10,000 t and 10,500 t respectively.

The weighted average bid has declined by JPY 964 ($9) as compared to the previous month, which was concluded at JPY 29,370/t FAS level in Sep’20. While in Sep’20 the bid price has been recorded at one year high since Jun’19.

Following a downturn in the global scrap prices, bids in Kanto tender have also observed a decline. Monthly around 20,000-25,000 t of H2 scrap is auctioned through Kanto tender and the FoB prices for the same are higher by around $9-10/t than FAS prices. Kanto tender serves as a benchmark for the Japanese scrap export market.

Prevailing Japanese scrap export offers lower than Kanto bids – Currently, Japanese H2 scrap is being offered at around JPY 27,500-28,000/t FoB level. South Korean major steel – Hyundai Steel lowered bids for Japanese H2 scrap towards Sept end. The bid price for H2 scrap was lowered by JPY 1,000/t to JPY 27,000/t FoB Japan.

If we translate Kanto tender, on FoB basis it would come to JPY 29,000/t FoB level which is significantly higher than ongoing price levels. Hence it’s quite skeptical if the outcome of the Kanto tender lead to an increase in export offers, considering the successive decline in bids from overseas buyers.

Japanese scrap export prices softened in recent deals –

• Vietnamese buyers have softened the Japanese scrap prices. Bulk 3000 t of H2 scrap was booked at $295/t CFR Vietnam basis earlier this week.
• Japanese bulk scrap prices to Bangladesh have come down slightly by $1-2/t w-o-w in the recent booking made by Bangladesh based steel mill. A steel mill has booked around 15,000-20,000 t of Japanese H2 scrap at $306/t CFR Chittagong basis for Nov’20 loading, sources reported SteelMint.

Japanese scrap exports decline in Aug– Japan’s ferrous scrap export witnessed a fall by 8% to 0.64 mn t in Aug’20 as against 0.7 mn t a month ago. Vietnam remained the largest scrap buyer from Japan and registered imports of 0.28 mn t (down 7% from Jul’20). Scrap demand is expected to stay firm in the next few months on sustained the demand from China and improving domestic requirements after the monsoon season ends in October.

Tokyo Steel’s domestic scrap prices unchanged since mid Sept’20 -Japan’s major steel manufacturing giant Tokyo steel, has kept its purchase price unchanged since mid-Sept’20. The company is currently paying at JPY 27,000/t ($256) for H2 scrap delivered at its Tahara plant in Central Japan and JPY 26,000/t ($ 247) in Utsunomiya plant (Kanto region).