Japan: Kanto scrap export tender bids surge further to multi-year high

A total of 10,000 tonnes (t) of scrap was awarded and the average price for H2 material stood at around JPY 67,010/t ($534/t) FAS, higher by JPY 3,500/t ($28/t) m-o-m, in Japan’s monthly Kanto Tetsugen scrap export tender for April, 2022, which was concluded today. The price hit a multi-year high from 2008, SteelMint learnt.

Meanwhile, currency depreciation and tight material availability continue to push up Japanese scrap offers.

Market participants believe that the bids in today’s Kanto tender are lower than the expected levels. However, there is room for further hike in Japanese scrap export prices in the near term, considering the higher bids in today’s tender.

This is the second sequential month when the South Korean mills won the Kanto tender. Hence, prominent Japanese scrap buyers like Hyundai Steel are likely to keep their bid price unchanged or even cut slightly this week, SteelMint understands.

FOB prices for Japanese scrap exports are higher by $9-10/t vis-a-vis FAS prices.

Japanese scrap buyers’ market overview:

• South Korea: Japanese scrap export offers to South Korea have increased by around JPY 9,000/t in the last one-month post-Kanto tender results announced on 9 March, 2022. Currently, the offers for Japanese H2 grade are being quoted at JPY 66,000/t ($527/t) FoB levels. Major mills booked US and Russian bulk cargo earlier in the month.
• Vietnam: Scrap buyers were cautious in booking fresh slots, as most were waiting for a price correction. Meanwhile, earlier in the month, a few deals in small quantities were booked from Japanese suppliers as their (Japan’s) currency weakened. Fresh offers for the H2 grade material are being quoted at $630/t CFR levels, while bids are at $610-615/t CFR levels.
• ·Bangladesh: Bulk cargo buyers remained silent in the Japanese market over the last few months . Meanwhile, major mills booked a couple of bulk cargoes from the US, considering it was cost-effective. But now, since the Japanese yen depreciated, buyers have slightly raised their inquiries for Japanese cargo. Fresh offers for Japanese scrap are likely to be on the higher side for May shipments.

Tokyo Steel hikes scrap buy bids by up to $8/t: Tokyo Steel hiked scrap purchase prices for the second time this month. The company increased bids by $8/t for Utsunomiya and $4/t for Tahara and other works. Post-revision, the company’s bid price for H2 scrap stands at JPY 65,500/t ($521/t) delivered to Tahara and JPY 66,000/t ($525/t) for Utsunomiya, effective 13 April, 2022. Hike in export prices has pushed mills to lift domestic offers.

The company has suspended delivery of steel products to both the domestic and overseas markets from 7 April, 2022 and has decided to liquidate its order backlog instead and assess market trends in Japan and overseas. In response to the sharp volatility in the global steel market triggered by Russia’s invasion of Ukraine, the company had suspended offers for all products on 7 March before resuming the same on 28 March.

Outlook: The tender outcome has not impacted scrap prices significantly. Hence, overseas buyers will be able to resume bulk bookings soon to take advantage of the currency depreciation.