As per recent updates received from sources, ‘Kanto Tetsugen’- Japan’s monthly ferrous scrap export tender for Aug’19 has concluded today (9th Aug’19) in the Kanto region. Total of 25,000 MT of H2 scrap was awarded at an average of JPY 27,714 /MT (USD 261), FAS, as compared to JPY 28,060/MT in July 2019, witnessing a fall of JPY 346/MT on a monthly basis.
As per SteelDaily’s report, Tokyo and Sanko Shinko fetched 15,000 MT at JPY 27,810/MT and 10,000 MT at JPY 27,570/MT respectively. Monthly around 20,000-25000 MT of H2 scrap is auctioned through this tender. Notably, the FoB prices for the same are higher by around USD 9-10/MT than FAS prices.
In terms of Japanese Yen, this is the 5th successive monthly fall recorded in average bids; however, the rise in average price of the bids by USD 3 /MT ,M-o-M (USD 258/MT in July’19 vs USD 261/MT in Aug’19) suggests that this price lowering is mainly on the account of adjusting for the recent appreciation of local currency, rather than the market trend moving downwards, while the recent hike in Japanese domestic price index, along with raising of export offers of Japanese scrap last week, support the hypothesis.
What can be inferred from Kanto’s result in Aug’19?
It was being expected that the average bid in Aug’19 would remain more or less stable with the bottoming out of the Japanese scrap prices achieved by later part of July’19. The slight lowering in average bids this month on currency growth aside, the bids signal an overall stability in the Japanese scrap market. However, with Obon festival holidays coming next week, the domestic market is likely to witness a brief slowdown.
With the current economic and political strains between South Korea and Japan, by the standoff between the buyers and exporters of the two countries, has ensured weak demand from the South Korean steelmakers for Japanese scrap. Thus the total volume auctioned this month was as high as 25,000 MT, on the availability of more material and ease in supply.
South Korea’s largest importer Hyundai Steel has not bid for Japanese scrap in over a month now, after last lowering its bid to JPY 27,000/MT on 5th July’19, while observing increased scrap bookings from other origins. The average bids for Kanto Tender thus stand higher by JPY 1,000/MT than current market levels.
Japan’s leading EAF steelmaker Tokyo steel also lowered scrap purchase price this week by JYP 500-1000/MT at 2 of its works, on currency appreciation, which had followed a price hike at the company’s Utsunomiya plant 2 weeks ago.
After staying in the range of 108-109 levels in the last 2 months, the Japanese Yen has now appreciated to 106 levels against USD, while in comparison to 111-112 levels against USD in March-April’19, the currency is now significantly stronger.
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