Japan’s Kanto scrap export tender fails to conclude on price disparity

Japan’s scrap export price driver, the monthly Kanto Tetsugen ferrous scrap export tender, was conducted today for November. Lower bids from participants resulted in the tender remaining inconclusive for the second time this year after May.

Previously, the tender had failed to conclude for two straight months in November and December 2021.

Sources highlighted that the bid price was comparatively lower than the suppliers’ target price and prevailing domestic offers, which were around JPY 49,000-50,000/t FAS for H2 grade scrap. However, low material availability has kept prices higher for the time being. Demand from overseas buyers like South Korea, Vietnam, and other countries remains bearish.

Last month, around 10,000 t of scrap was awarded and the average price for H2 scrap stood at around JPY 49,865/t ($341/t) FAS. Prices fell by JPY 1,175/t ($8/t) from JPY 51,040/t ($357/t) in September.

Market highlights

• South Korean mills muted: South Korean steel mills have not raised bids for Japanese scrap. Meanwhile, Hyundai Steel has announced a cut in scrap buy prices for the second time this month by KRW 20,000/t ($14/t), as per a SteelDaily report. The company has cut scrap buy prices for its Pohang, Incheon and Dangjin works. Total ferrous scrap imports by South Korea stood at 0.33 mnt in September, down 20% y-o-y.
• Limited bids from Vietnam: Vietnam’s imported scrap market has remained largely quiet due to bearish domestic market sentiments, with prices remaining mainly rangebound. Prices for bulk Japanese H2 remained stable at $375/t CFR.
• Bangladesh struggles with LC issues: Bangladesh-based mills remained largely absent in the bulk scrap market due to LC opening restrictions. Meanwhile, electricity and gas crunch led to production cut as mills curtailed capacity utilisation to 50%.

Japan’s Tokyo Steel trims scrap procurement prices: Tokyo Steel has lowered scrap purchase bids twice in just three days. After the second revision, prices of H2 scrap stand at JPY 48,500/t ($332/t) delivered to the Tahara factory and JPY 49,000/t ($336/t) to Utsunomiya, excluding the Takamatsu works.

Outlook: Japanese domestic scrap prices may fall further on declining export offers. The prevailing demand and supply mismatch is likely to keep Japanese scrap prices under pressure.