Japanese scrap export offers less likely to fall sharply backed by higher bids in Kanto tender

Japan’s bellwether monthly Kanto Tetsugen ferrous scrap export tender for June 2022 has been concluded today. A total of 5,500 tonnes (t) of Japanese H2 scrap has been awarded at an average price of JPY 53,560/t ($399/t) FAS, SteelMint learnt. The Vietnam-based buyer may have won the tender, sources said. Japanese scrap export offers are less likely to drop further supported by higher bids received in the Kanto tender.

However, the average bid for June tender fell considerably by JPY 13,450/t ($100/t) as compared to bid fetched in the last tender (April). The tender for May 2022 was inconclusive owing to lower bids from participants.

The FOB prices for export of the Japanese material are higher by around $9-10/t vis-a-vis FAS. Notably, the Kanto tender serves as a benchmark for the Japanese scrap export market.

Market overview-

• Hyundai Steel bids for Japanese material: South Korea’s major Hyundai Steel has cut bids for Japanese scrap sharply by JPY 500/t ($4/t) for H2 and HS grade scrap as against the last bids presented on 26 May. Bids for H2 scrap are now at JPY 53,000/t ($395/t) while those for HS are at JPY 57,500/t ($429/t) FOB.

Meanwhile, South Korean mills including Hyundai Steel have cut its domestic scrap purchase prices, as per Steel Daily. Mills have slashed purchase prices of all grades of scrap by KRW 10,000/t ($8/t).

• Vietnam buyers may return to Japanese market: Considering the June tender outcome, Vietnam-based buyers are likely to resume buying of Japanese material. Offers for bulk H2 material are now at $470/t CFR basis. Meanwhile, most buyers have stocked up the material for immediate need from USA. The discrepancy in bids and offers for Japanese material and sluggish demand from end-users kept buyers  away from booking any fresh cargoes.

Additionally, with the lifting of lockdown and economic stability returning in China, demand for Vietnam’s billets and steel will likely improve in the near term.

• Bangladesh buyers at bay: Bangladeshi buyers are still away from the Japanese scrap market. Suppliers as well have not quoted any offers to Bangladesh. However, major mills are actively looking for other alternative sources for bulk bookings. Recently, two more bulk cargoes were booked from USA and EU at $490-495/t CFR basis. Many mills are in a wait-and-watch mode amid continued currency devaluation and hoping for a clear market direction after budget presentation.
• Tokyo Steel lowers scrap buy price by $8/t: Tokyo Steel, Japan’s largest EAF steelmaker, has cut its scrap purchase prices for the third time this week. The company has cut bids by JPY 1,000/t ($8/t) for all steelworks effective 10 June 2022. Post revision, the bid prices for H2 scrap were at JPY 56,000/t ($419/t) delivered to the Tahara plant, while bids for the Utsunomiya plant were at JPY 55,500/t ($415/t).

Outlook: Japanese ferrous scrap export prices are less likely to see a sharp correction considering higher bids in Kanto tender and recent bids put by Hyundai Steel, SteelMint understands.

Japan recorded a 10% rise in scrap exports at 650,000 t in April 2022 as against 590,000 t seen in March, as per customs data maintained with SteelMint. South Korea remained the largest buyer of Japanese scrap on strong demand from mills and limited shipments from Russian counterparts.