Japan: Bids in Kanto Scrap Export Tender Witness First Hike Since Jan’20

Kanto Tetsugan – Japan’s monthly ferrous scrap export tender for the month of  May’20 has concluded today (12th May’20). A total of 23,000 MT of Japanese H2 scrap was awarded at an average price of JPY 22,476/MT (USD 209) FAS, as compared to JPY 20,656/MT in Apr’20. This month’s average bid sharply climbed up by JPY 1820/MT (USD 17) against last month’s bid.

After falling by around USD 18/MT last month in April, now the bids have rebounded by similar margin and is almost at the same level as in March month. Separately, the 3 winning bids were awarded 5,000 MT at JPY 22,750/MT, 3,000 MT at JPT 22,500/MT and 15,000 MT at JPY 22,380/MT FAS, for Japanese H2 scrap.

For the first time after Jan’20, there has been a hike in bid price witnessed, as the same had been in a sharp downtrend since the last 3 tenders, falling by JPY 6011 (USD 56) since January’s JPY 26,667/MT level, before finally seeing a rise this month, indicating support from overseas demand. Total quantity of H2 auctioned off this month moved up from 20,200 MT last month to 23,000 MT, as buyer interest improved.

SteelMint Analysis – Although domestic Japanese scrap prices have continued to be in a downtrend due to very low demand in the local market, however, on the back of strong buying from overseas markets for Japanese scrap, from countries such as Taiwan as well as good demand from Vietnam, in addition the major buyer South Korea, the export prices of Japanese scrap have rallied over the last month, with the rise in Kanto winning bids not coming as a surprise.

Over the last few weeks, Japanese export offers to South Korea moved up to over JPY 22,000/MT FoB Japan, from JPY 18,500/MT levels for South Korean buyers, while few major Korean steelmakers booking good quantities at increased levels.

For countries such as Taiwan and Vietnam, the extremely volatile price levels from USA origins and tight supply of scrap at North American yards, encouraged to increase their bookings from Japanese suppliers, especially amid favourable market prices. Following the Kanto tender result, it is expected that a further slight rise in Japanese offers as well as bids by South Korean mills can be witnessed in the coming days, as current price levels are still somewhat lower than Kanto bids.