Japan: Bids in Kanto scrap export tender higher than prevailing market prices

Japan’s scrap export price driver, the monthly Kanto Tetsugen ferrous scrap export tender, for Sept’21 was concluded on 9 Sept’21. A total of 20,000 tonnes (t) of Japanese H2 scrap was awarded at an average price of JPY 46,260/t ($420/t) FAS, SteelMint learnt from sources. The average bid fell by JPY 386/t ($4/t) m-o-m as compared to JPY 46,646/t ($423/t) concluded for last month’s Kanto tender. This is the third sequential drop in Kanto tender prices, sources informed.

Notably, Vietnam remained the only buyer this month in Kanto scrap export tender. The entire four cargoes of 5,000 t each were booked by Vietnam, sources informed SteelMint.

Bids were higher than prevailing market prices which show that chances of a price correction are less likely in the Japanese scrap export market in the short term.

Around 15,000-20,000 t of H2 scrap are sold every month through the Kanto tender auction. The FoB prices for the same are higher by around $9-10/t vis-a-vis FAS. The tender serves as a benchmark for the Japanese scrap export market.

Japanese scrap buyers’ market overview:

• Japanese scrap export offers to South Korea were seen at JPY 45,500/t FoB levels last week, which are again lower than today’s Kanto scrap export tender prices. South Korean buyers did not bid for Japanese scrap this week as they are likely to opt for alternative sources such as Russian A3 scrap. However, a further price reduction is least expected from Japanese suppliers.
• Vietnam’s scrap buyers have slightly increased their inquiries in Japanese scrap. The Vietnam market remained mostly quiet for last two months on strict lockdown, owing to Covid curbs. Indicative imported bulk H2 scrap prices were at $460-470/t CFR levels at the beginning of the week. Increasing overseas demand for billets and finished steel is likely to keep Vietnamese buyers active in the market.
• Bulk cargo buyers in Bangladesh resume inquiries for the US. Two bulk cargoes are heard to have been booked so far, details of which, however, remained unconfirmed. Market players are certain that major buyers will resume bookings for Japanese cargoes as well due to increased domestic finished steel demand.
• The Chinese importers remained away from booking Japanese scrap as the market players (in China) are actively involved in trading billets from Vietnam and Indonesia. Currently, billets are being offered at $705-715/t CFR levels. Interestingly, all the bookings have been done for Oct and Nov shipments.

Japan’s Tokyo Steel cuts scrap purchase prices for Utsunomiya plant: Japan’s leading EAF steel mill, Tokyo Steel, has cut scrap purchase prices for the second time in Sept’21.

• The company has decreased prices by JPY 500/t ($5/t) for the Utsunomiya steelworks, effective 9 Sept. However, prices for its four other steelworks are stable.
• After the recent revision, the company would pay a bid price for H2 scrap at JPY 47,000/t ($426) for the Utsunomiya plant.

Outlook:
Based on today’s tender outcome, Steelmint notes that Japanese suppliers are less likely to reduce offers for scrap exports. Meanwhile, sentiments in the other major export markets of Japanese scrap are also slow which is likely to cap any further rise in Japan’s scrap export prices.