Japan’s monthly Kanto Tetsugen export tender concluded on Wednesday with three winning bids booking 15,400mt #2 HMS at an average price of JPY42,976/mt ($394.8/mt) fas Tokyo bay, up JPY3,705/mt or $34/mt from last month’s average of JPY39,271/mt fas Tokyo bay.
First, two winning bids bought 5,200mt of #2 HMS at JPY43,060/mt fas Japan while the third bid for 5,000mt was JPY42,800/mt fas Japan.
The winning bid was higher than the prior deals for seaborne Japanese scrap. On the fob Japan basis, the average bids for #2 HMS jumped to around JPY44,000/mt fob. These levels are higher by around JPY1,000-1,500/mt than the prior offers in the export market.
Following the lower-than-expected rise in Kanto bids, Tokyo steel cut scrap procurement prices on Wednesday. The steelmaker’s latest bids for #2 HMS are at JPY42,000/mt ($385/mt) delivered Utsunomiya works in the Kanto region, effective March 11.
Last week, South Korean mills bought few small bulks of #2 HMS at JPY42,500-43,000/mt fob, indicating a rebound in Japanese scrap export prices. Hyundai Steel received active responses for #2 HMS bids at JPY43,000/mt fob as the company booked bulk volumes in its last tender.
Recovery in Japanese prices supported sentiments in the country as sellers’ eye Chinese importers to earn better margins than the usual Taiwanese and Vietnamese mills. Post Chinese New Year holidays, more Chinese mills have resumed trades for Japanese scrap in small bulk cargoes. Prices for HS grade equivalent to P&S reported at $500-510/mt cfr China. Rising competition from new ferrous scrap suppliers like Singapore and South Korea in China, however, could pressure Japanese sellers.
In the coming days, traders expect more export deals at increased prices. Tokyo steel’s price revision is likely to limit the extent of the rise. Supply also remains scarce amid increased demand for high-grade scrap in East and Southeast Asia.
Japanese finished steel prices remained elevated for March-April deliveries on the strong demand outlook despite slow economic recovery. The Olympics, postponed because of the COVID-19 pandemic, are scheduled for July 23 to Aug 8 and the Paralympics from Aug 24 to Sep 5 without foreign spectators is expects to improve business sentiments.
On Wednesday, the Japanese currency yen depreciated to JPY108.8 against the US dollar from 104.5 levels a month earlier. Depreciating currency tends to support ferrous scrap exports and more deals are expected in the coming days.