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

Average winning bids at Japan’s monthly Kanto Tetsugen tender hit a 16-month high on Wednesday. These bids were at JPY29,370/mt ($277/mt) fas Tokyo bay, up by JPY2,154/mt ($20.3/mt) from JPY27,212/mt fas Tokyo bay in the prior month. The tender sold 20,000mt ferrous scrap for deliveries scheduled latest by October.


Ferrous scrap remains scarce and Asian flat steel prices bullish thus pushing prices to a new high. On the fob Japan basis, average bids were at JPY30,300-30,500/mt ($286-288/mt) fob Japan, higher by JPY2,000-2,500/mt than the current market levels. Traders are anticipating Japanese ferrous scrap export prices to increase further in the coming days.


In the results announced on Sep 9, two winning bids were awarded 10,000mt of #2 HMS. ‘Itochu steel’, one of the leading Vietnamese traders was heard to have booked material at JPY29,370/mt fas Japan. 

Market participants were already expecting Kanto tender’s average bids to rise for a second successive month. In the last two months, average bids rose by a total of JPY5,796/mt ($55/mt).  

The tender prices are likely to set precedent for Japan and Southeast Asian markets. 


Recovering domestic steel consumption 

Domestic steel consumption in Japan rebounded in the first three months of FY2020 (April 2020-June 2020) after weak end-user demand in the construction and automotive sectors earlier this year. 

Major mills who had shut off their blast furnaces are expected to resume operations soon. JFE Steel has restarted a banked blast furnace at its Fukuyama works in the Western region and is likely to achieve a normal production level in two months. Japanese mills are optimistic about demand recovery, especially in the auto sector. In the second half of FY2020 (Oct 2020-March 2021), the construction sector is also expected to recover. Japanese mills are therefore preparing to meet this anticipated increase in demand.


East Asian ferrous scrap prices to rise 

Recent export deals of Japanese H2 small bulks were reported at $300-305/mt cfr Vietnam. On cfr South Korea basis, the bids in Kanto tender stand at KRW360,000/mt cfr South Korea, higher than present market bids of KRW330,000/mt delivered to plant for domestic heavy A scrap. This could force domestic scrap yards to raise offers, Davis Index learned from a steelmaker. 




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