Japan: Bids in Kanto Monthly Scrap Export Tender Edge Down by USD 3/MT

As per recent updates received from sources, ‘Kanto Tetsugen'- monthly ferrous scrap export tender for Sept’18 was concluded today (on 11th Sept) in the Kanto region in Japan. The average bids for Sept’18 were recorded at JPY 34,486/MT (USD 309), FAS. On monthly premises, bids have edged down by JPY 374/MT (USD 3) M-o-M as against the average bids fetched at JPY 34,860/MT (USD 312), FAS in Aug’18. Following which Japanese scrap prices in Kanto and Gulf region seem to be weakened further amid dull demand and narrowing the gap between global scrap prices and Japanese scrap prices.

In Sept’18 auction, total 15,510 MT of Japanese H2 scrap was awarded for three winning bids placed. The first winner fetched 5,150 MT of H2 scrap at JPY 34,735/MT followed by second and third securing 5000 MT each at JPY 34,500/MT and JPY 34,215/MT respectively.  Monthly around 20,000 MT H2 get auctioned through this tender. 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.

What could be the impact of this ?

According to reports, the shipment of 10,000 MT scrap is likely to done in between 7th-13th Sept and remaining 5000 MT of shipping has started from 10th Sept and likely to complete by 14th Sept. There is a strong view that the district supply and demand will be tightened by the overlap of two shipments of the Kanto Tetsugen Association.

Following the decline in Kanto tender bids fetched for this month, Japanese domestic as well as export scrap prices are likely to turn down further in the upcoming days however sharp fall is unlikely and demand for Olympics 2020 construction activities may remain good. In Kanto region, the purchase prices of H2 are assessed at JPY 36,000-37,000/MT while in the Gulf region prices of H2 fell to JPY 34,000-35,000/MT now. Thus, bid price stood around JPY 1000-1500/MT lower than current market levels in Kanto.

What happened in Japanese scrap market in last 1 month ?

Japan’s leading EAF steel mill Tokyo witnessed successive price hikes in August amid increased operating hours. Prices climbed up by JPY 1000-1500/MT (USD 9-14) M-o-M in Aug’18 hitting last 8 months’ high at Utsunomiya. However, Tokyo has reduced prices at Utsunomiya plant twice in Sept’18. Currently, Tokyo Steel fetches H2 scrap at JPY 37,000/MT for Utsunomiya and JPY 36,500/MT at Tahara works as per last update on 08th Sept.

South Korean Hyundai Steel continued booking USA and Russian origin bulk scrap cargoes skipping bidding for costlier Japanese scrap in last 1 month however, the demand for high grade Japanese scrap remain decent from South Korean steelmakers. Recently, Hyundai steel has shifted its method of purchasing from bidding to negotiating individually with sellers’ in the Japan’s spot market.

In last one month’s time, USD/JPY exchange rate remained range bound low at 110.5 to high at 111.5. JPY stands at 111.4 today which was trading at similar levels in the mid of August.