Japan’s monthly Kanto Tetsugen scrap tender concluded on Friday, April 9 with a single winning bid fetching 20,000mt #2 HMS at JPY43,380/mt ($396.96/mt) fas Tokyo bay, up JPY404/mt or $4/mt from last month’s average of JPY42,976/mt fas Tokyo bay. Industry sources told Davis Index that the total volume in four shipments of 5,000mt each would be supplied to Vietnamese consumers latest by May.
The winning bid is also higher than prior deals for seaborne Japanese scrap. On Wednesday, the weekly index for #2 HMS rose by JPY1,458/mt ($13.3/mt) to JPY41,833/mt ($380.9/mt) fob with traders raising offers to JPY44,000-44,500/mt fob following the rise in Kanto bids. These levels are about JPY2,000-2,500/mt higher than prior export offers.
South Korean steel mills bid for Japanese #2 HMS scrap at around JPY1,500-2,000/mt lower than the exporters’ expectations, on fob terms.
Following the ‘as expected’ rise in Kanto bids, Tokyo steel is likely to revise scrap purchase prices on Friday. The steelmaker has held prices stable since March 26. Tokyo steel’s bids for #2 HMS are at JPY40,000/mt ($366/mt) delivered Utsunomiya works in the Kanto region.
Last week, South Korean mills bought few small bulks of #2 HMS at JPY41,500-42,000/mt fob, indicating a rebound in Japanese scrap export prices. Hyundai steel received active responses for #2 HMS bids at JPY43,000/mt fob. The company had booked bulk volumes in its last tender. Supply also remains scarce amid increased demand for high-grade scrap in East and Southeast Asia.
Recovery in Japanese prices supported sentiment as sellers focus on Chinese importers to earn higher margins compared to the usual deals from Taiwan and Vietnam. Offers for Japanese HRS grade equivalent to P&S reported at $500-510/mt cfr China. Chinese domestic billet prices breached a 12.5 year high of CNY5,060/mt ex-Tangshan amid production cuts, while imported billets traded at $660/mt cfr China.
Japanese finished steel prices remained elevated for March-April deliveries on the strong demand outlook despite slow economic recovery. The Olympic Games scheduled to start on July 23, and Paralympics from Aug 24, without foreign spectators, are expected to improve business sentiments.
The Japanese yen depreciated to JPY109.35 against the US dollar from 108.2 levels a month earlier. Depreciation of the yen tends to support ferrous scrap exports and more deals are expected in the coming days.
($1=JPY109.35)