Japan: Bids in monthly Kanto scrap export tender rise to multi-year high, up by $78 m-o-m

A total of just 12,000 t of Japanese H2 scrap was awarded at an average price of JPY 38,710/t ($371) FAS basis in Kanto Tetsugen monthly ferrous scrap export tender concluded today for the month of Dec’20. The tender was concluded in slots of 6,000 t of scrap each at JPY 38,910/t ($373) and JPY 38,510/t ($369) respectively.

Notably, both the cargoes have been booked by Vietnamese steel mills, and the bid price is almost 10-12 year high, sources have reported to SteelMint. The weighted average bid has increased by JPY 8,105/t ($78), as compared to the previous month, which was concluded at JPY 30,605/t FAS level in Nov’20.

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. The tender serves as a benchmark for the Japanese scrap export market.

SteelMint analysis-

• Japanese scrap offers to Vietnam have moved up this week, bulk H2 offers for Vietnam were heard at $368-370/t CFR levels. However, fresh offers would be quoted in next coming two days
• Japanese suppliers are waiting for more clear directions to quote fresh offers, hence limited offers were reported for Japanese H2 bulk to Bangladesh. However, recent indications for bulk H2 is being reported at around $390/t CFR level
• Due to high steel prices in Japan, bids have increased these levels, however, the suppliers have sufficient stock in hand
• Hyundai Steel had lifted bids for higher grade Japanese scrap by JPY 3,000/t ($29), towards the closing of last week, and the bid price for HS and shindachi was set at JPY 37,000/t level, however, the company did not place any bid for other scrap grades including H2 scrap

Japan’s ferrous scrap exports witnessed an increase by 22% to 0.89 mn t in Oct’20 as against 0.73 mn t in Sep’20, as per data recorded with SteelMint. Vietnam remained the major buyer and imported 0.37 mn t in Oct’20. Active inquiries for Vietnam origin billets from China, supported scrap buying.

Outlook– With the sharp hike in bids and increasing demand from overseas buyers including Vietnam and Korea, as well as the growing domestic market, the market is expecting Japanese scrap prices to remain on the higher side in the coming days.