Kanto Tender fetched bids range bound successively since last three months in Japan without major change in price levels.
As per recent updates received from sources, ‘Kanto Tetsugen’- monthly ferrous scrap export tender for July’18 concluded today (on 11th July) in the Kanto region in Japan. The average bids for Jul’18 recorded at JPY 34,330/MT (USD 309), FAS. On monthly premises, bids have edged up by JPY 330/MT (USD 3) M-o-M as against the average bids fetched at JPY 34,000/MT (USD 306) in Jun’18. Following which Japanese scrap export prices in Kanto region seem to be strengthening further on improving demand from South Korean importers for high grade scrap.
In Jul’18 auction, total 15,000 MT of Japanese H2 scrap was awarded to winning bid placed. Monthly around 20,000 MT H2 get auctioned through this tender, export volumes have increased for this month against last months’ tender amid increased availability of H2 in the market and disparity in the supply & demand for it as compared to high grade scrap.
It is also to be noted that FoB prices for the same are higher by around USD 9-10/MT than FAS (free alongside ship) prices. Bids recorded in Kanto Tetsugen for Jul’18 pushes Japan’s domestic H2 scrap price assessment up in the range of JPY 34,500-35,500/MT (USD 311-320), FoB Kanto region.
What could be the impact of this?
It was the matter of high interest among participants to analyse the levels to which bids for Japanese monthly Kanto export tender get fetched amid mismatch between Japanese sellers’ price expectations and importers bids. Following an increase in the bids fetched in Kanto tender, Japanese domestic scrap prices are likely to turn up in the coming days. However, export prices are likely to remain range bound with slight strengthening for time being.
What happened in Japanese scrap market in the last month?
Japan’s leading EAF steel mill Tokyo slashed prices thrice in June for H2 delivered to its Utsunomiya work located in Kanto region. Prices moved down by JPY 1500/MT (USD 14) in 1 months’ time as Tokyo Steel fetches H2 scrap at JPY 35,500/MT (USD 321) for Utsunomiya and JPY 35,000/MT at Tahara works as per last update on 22nd June. Moreover, the price gap between Utsunomiya plant and Western Okayama plant remained widened by JPY 4000/MT (USD 36) for the same grade H2 in Japan.
Expectations about improving finish steel and scrap demand in South Korea kept Japanese sellers optimistic about export offers which remained in the range of JPY 33,000-35,000/MT, FoB for H2 in Kanto region. However domestic scrap prices remained to bottom side since last 2-3 successive weeks in Japan.
Leading steelmakers like Hyundai and Dongkuk steel from largest importing country South Korea shifted their interest from H2 and kept purchasing high-grade Japanese scrap like HS and SB. While few contracts for bulk vessel have been made for USA mix grade and Russian scrap A3 in past one month’s time resulting in less purchases from Japan.
Hyundai Steel slashed bids for Japanese H2 and maintained at level of JPY 33,000/MT (USD 297), FoB Japan. However, in the latest bids presented last week, Hyundai has raised medium grade scrap HS and Shredded bids by JPY 1000/MT to JPY 38,000/MT (USD 344) levels and for high-grade Shindachi Daichibara (SB) to JPY 41,000/MT (USD 371), FoB Japan keeping bids for low grade scrap like H2 and H 1&2 (50:50) unchanged.
In last one month’s time, USD/JPY exchange rate kept fluctuating in the range of 109.5 to 111.3. In last one weeks’ time, JPY depreciated by around 1%. JPY stood at 111.3 today which was trading at 110.3 a week ago against USD.
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