Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Japan’s monthly Kanto Tetsugen ferrous scrap export tender for January hit a 12-year high amid high global scrap prices and tight supply. The resumption of Chinese ferrous scrap imports since Jan 1 boosted market sentiment. Chinese importers bought a couple of small bulk deals on a trial basis and are expected to book large tonnages soon. 


The only winning bid on Wednesday, JPY44,751/mt ($431.7/mt) fas Japan bay, was for 15,000mt #2 HMS, which is up JPY6,041/mt or $58/mt from last month’s average of JPY38,710/mt ($373/mt) fas Tokyo bay. A total of 18 bids were received from 15 companies.


Kanto Tender – Jan 13, 2021 

Market participants had expected prices to rise sharply and most projected it to be around JPY44,000-45,000/mt. Supplies remain scarce amid an auto sector revival in East and Southeast Asia driving demand for high-grade scrap. The tender results will increase Japanese scrap prices in the coming days, said traders. 


On the fob Japan basis, the average of bids for #2 HMS is around JPY45,500-46,000/mt ($439-444/mt) fob, higher by JPY1,500-2,000/mt than the current market levels. Last week, a South Korean steel mill purchased 30,000mt Japanese #2 HMS at JPY43,000/mt fob. 


Domestic scrap prices in Japan are also sensitive to rising demand and competition from buyers in importing countries. In the domestic market, Tokyo Steel had hiked scrap procurement price 11 times in December. However, the steelmaker’s bids are unchanged in January. In the last revision, effective Dec 26, the steelmaker lifted ferrous scrap purchase prices by JPY1,000-2,000/mt ($9-18/mt) with #2 HMS price at JPY43,000/mt ($415/mt) del Tahara and Utsunomiya.


Japan has declared a state of emergency in Tokyo and surrounding areas amid the surge of COVID-19 cases to the highest levels since the start of the pandemic. The staging of the Olympic Games in the country in August again looks impossible and could impact consumption and economic activities.  


Mills are ramping up production on-demand recovery but are struggling to maintain profitability amid a sharp rise in ferrous scrap prices. Also, in January, the Japanese yen continued to gain against the US dollar dampening scrap export sentiments. Prices of finished steel have increased but mills could consider a few adjustments to stimulate demand. Market participants believe the Chinese New Year holidays in early February could lower steel demand in East Asia and pressure Japanese scrap prices.



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