Bids in Mar’19 export tender have increased sharply and hit around last 5-month high.
As per recent updates received from sources, ‘Kanto Tetsugen’- Japan’s monthly ferrous scrap export tender for Mar’19 concluded today (12th Mar) in the Kanto region. Total 13,200 MT of H2 scrap has been auctioned in two winning bid presented at an average of JPY 34,010/MT (USD 305), FAS in Mar’19.
On monthly premises, average bid recorded in Mar’19 has moved up sharply by JPY 2,155/MT (USD 19.4) against the average bid at JPY 31,855/MT (USD 288), FAS in Feb’19. Monthly around 20,000 MT of H2 is auctioned through this tender. Also, it is to be noted that FoB prices for the same are higher by around USD 9-10/MT than FAS (free alongside ship) prices.
As per SteelDaily’s report in today’s tender, MMK and Shinko Shoji companies fetched 7,200 MT and 6,000 MT of H2 respectively while the total volume to be exported fell last 4-month low in Mar’19 amid tight supply.
Why have Japanese scrap prices been rallying in recent past?
According to sources, participants were already expecting that the average bid in Mar’19 would jump following a sharp recovery in local scrap prices in Japan and strengthened global prices. Added to which, local EAF steelmakers have raised restocking activities ahead of Golden week holidays in end-April.
Japan’s leading EAF steelmaker Tokyo Steel observed a total increase by JPY 4,000-5,000/MT (USD 36-45) in scrap purchase price since mid-Feb’19 amid strong local demand and tight supply. Tokyo’s scrap prices have reached 4 months high as the similar levels were observed in Nov’18. Kanto tender’s average bid stands almost in line with Tokyo steel’s H2 purchase price which is presently at JYP 35,000/MT at Utsunomiya in the Kanto region.
Although South Korean importers remained on sidelines amid high inventories, still the gap between last contract price and offer stands around JPY 2000-3000/MT, (USD 18-27), the last deal for H2 scrap by South Korean steelmaker was concluded at JPY 32,000/MT, FoB Japan and now all Japanese suppliers eye H2 offers above JPY 34,500-35,000/MT, FoB (USD 310-315). It is believed that South Korean steel mills should have to raise their bids sharply to procure Japanese scrap now.
JPY depreciated by around 1.5% against USD in a month’s time. USD/JPY exchange rate stands at 111.4 today which was at around 109.8 levels on 11th Feb’19. This could put some pressure on export offers in Japan.
A trade source reported that latest H2 offers to Vietnam climbed as high as USD 345-350/MT, CFR as against last weeks’ trade concluded at USD 338-340/MT, CFR Vietnam which is up against USD 330/MT levels in mid Feb’19. Vietnamese scrap buyers continued scrap purchases even at high prices to fulfill the requirement.
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