Japan’s monthly ferrous scrap export tender – Kanto Tetsugen for May’18 has recorded increase of USD 12/MT M-o-M in its average bids indicating Japanese scrap prices to remain strong in the near term.
As per recent updates received from sources, ‘Kanto Tetsugen’- monthly ferrous scrap export tender for May’18 concluded today (on 10th May) in the Kanto region in Japan. The average bids for May’18 recorded at JPY 34,245/MT (USD 312), FAS which has increased by JPY 1266/MT (USD 12) on M-o-M basis as against the average bids fetched at JPY 32,979/MT (USD 301) in Apr’18.
In the May’18 auction, total 16,000 MT of Japanese H2 scrap was awarded through two winning bids placed. H1 bidder fetched 6,000 MT at JPY 34,470/MT (USD 314), FAS followed by H2 bidder for 10,000MT at JPY 34,110 MT (USD 311), FAS respectively. In Apr’18 tender, H1 bid was recorded at JPY 33,210/MT (USD 303).
Bids recorded in Kanto Tetsugen for May’18 pulled Japan’s domestic H2 scrap prices assessment in the range of JPY 33,000-34,000/MT (USD 301-310) at Kanto region. It is also to be noted that FoB prices for the same are higher by around USD 9-10/MT than FAS (free alongside ship) prices.
According to data maintained with SteelMint, the average bid recorded in Apr’18 had hit lowest so far in CY18 and hit five months low in April month amid sharp fall in demand and prices for scrap. However, it was expected by most of the traders and sellers that the bid prices would increase for May’18 tender owing to improving demand from domestic buyers and restocking activities witnessed before moving into Golden week holidays in Japan.
The demand for Japanese scrap from South Korean steelmakers remained very weak in last one months’ time amid considerable steel inventories, however, leading steelmakers like Hyundai and Dongkuk steel are now returning to the markets as steel inventories available with them are lowering down. The latest bids placed by South Korean steel mills for Japanese H2 scrap heard at around JPY 33,000/MT (USD 301), FoB Japan.
Following the rise in bids fetched in Kanto Tetsugen tender, Japanese domestic scrap prices are expected to increase further. Presently, Tokyo Steel mill fetches H2 at JPY 34,500/MT for its Tahara work in central region while JPY 33,000/MT at Utsunomiya works in Kanto region respectively. Tokyo steel’s bids for scrap remain unchanged since almost one month’s time and are expected to get revised soon. In the near term, demand for H2 is likely to improve further along with strong demand for high-grade scrap with strong anticipation to fetch decent prices from Japanese sellers.
South Korea’s share in Kanto increased significantly in 2017 – In CY 2017, total 225,000 MT ferrous scrap exported from Japan through this tender out of which Vietnam purchased highest 139,000 MT occupying 62% share followed by South Korea (81,000 MT) and Taiwan (5,000 MT) respectively.
In CY16, South Korea accounted for only 10,000 MT (4% share) in Kanto Tender which increased to 36% in CY17.
What is the Kanto Tetsugen export tender?
Kanto Tetsugen Cooperative Association was established in Nov’2001 to make the joint export of steel scrap to foreign countries along with the domestic trade. It consists of 80 companies of a metal recycling business in Tokyo, Saitama, Kanagawa, Chiba, Gumma, Tochigi, Ibaraki, and Yamanashi. It exports steel scrap majorly to East Asian countries like South Korea, China, Taiwan, Vietnam, and Indonesia. Kanto Tetsugen Tender set the benchmark in Japanese scrap market in terms of prices and trends. Every month around 20,000 MT H2 scrap is auctioned through this tender in Japan.
JPY depreciated by 3% in a month’s time against USD – In last one month’s time, JPY/USD exchange rate depreciated by around 3%. JPY stood at 109.7 today which was trading at 106.9 on 10th Apr’18 against USD.
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