Japan’s monthly Kanto Tetsugen scrap tender concluded on Tuesday, May 11 with three winning bids awarded a total of 15,150mt of Japanese #2 HMS scrap. The average of winning bids was JPY48,830/mt ($448.7/mt) fas Tokyo bay, up JPY5,450/mt or $50/mt from last month’s average of JPY43,380/mt fas Tokyo port.
The first and the second winning bids fetched 5,000mt #2 HMS at JPY49,279/mt fas Tokyo port and JPY49,229/mt, while the third bid was for 5,150mt at JPY48,015/mt fas Tokyo port. The scrap will be supplied to Southeast Asian consumers latest by June, industry sources said to Davis Index.
Twenty-seven bids from the 15 companies were received for 150,350mt Japanese scrap offered on Tuesday.
Scrap prices have jumped to a 13-year high to levels last seen during 2008’s financial crisis. Average bids had shot up to JPY50,650/mt in August 2008 and as high as JPY67,750/mt in July 2008.
On a fob basis, average winning bids in May’s tender are near JPY50,000/mt mark for #2 HMS. The results of the tender indicate a gap of over JPY6,000-7,000/mt in the current export price expectations against the prior deals for seaborne Japanese scrap. Steel mills in South Korea and Vietnam are expected to sharply hike their bids for Japanese scrap on fob terms this week.
Following the ‘as expected’ rise in Kanto bids, Tokyo steel is likely to raise scrap purchase prices further. The steel mill revised its ferrous scrap purchase prices, effective May 11, by JPY1,000-2,000/mt ($9-18/mt), a day prior to the Kanto tender after keeping them flat since April 21.
The steelmaker raised bids by JPY2,000/mt ($18/mt) for all the grades at Utsunomiya and Tahara works, while at the other three works, purchase prices were raised by JPY1,000/mt ($9/mt). Revised bids for #2 HMS are at JPY46,000/mt ($422) delivered Tahara. From a month earlier prices jumped by JPY6,000-7,000/mt.
Supply also remains scarce amid increased logistic challenges and demand for high-grade scrap in East and Southeast Asia. With the reduction of import duties and allowance of shredded scrap imports, Chinese importers are actively seeking scrap booking and Japanese sellers are focusing on Chinese buyers to earn higher margins compared to the usual deals from Taiwan and Vietnam. Chinese ferrous scrap consumption in steel production rose over 25pc in April month, according to the local media reports.
Japanese finished steel prices remained elevated on the strong demand outlook despite slow economic recovery. There is still uncertainty about the conduct of the Olympic Games, which are scheduled to start on July 23, and Paralympics from August 24, without foreign spectators.