Domestic and export ferrous scrap prices in Japan continued to trend up almost every day this week. Tokyo Steel raised domestic scrap prices for the ninth time in December. Effective Dec 24, Tokyo Steel’s ferrous scrap purchase prices rose by JPY2,000/mt ($19.3/mt) only for the Utsunomiya plant, with new #2 HMS bids at JPY41,000/mt ($396/mt) del plant.
Increased buying in Turkey, coupled with bullish offers due to ferrous scrap shortage and vessel delays could lead to a further rise in global ferrous scrap prices in January. In Turkey, the daily Davis Index for HMS 1&2 (80:20) settled at $470.7/mt cfr on Tuesday, up by $37.8/mt from Dec 16.
Asian buyers exercised caution while resorting to trades since the market participants do not foresee a fall in December prices. They feel a further rise is in the offing after Tokyo Steel’s ninth price hike for domestic scrap. Mills are worried about maintaining profit margins amid rising input costs. For any trade to conclude, prices have to rise by $10-15/mt cfr. Exporters are offering limited material at prices $30-40/mt above the bids levels placed by the mills.
China plans to do away with the 2pc import duty on ferrous scrap, and revive its most-favored-nation (MFN) system from January 1, 2021, as declared by the Ministry of Finance. Japan, along with Russia stands to benefit from the stance as a favored nation. This could lead to a surge in exports from Japan supporting prices.
Traders indicated that opening of Chinese market for imported ferrous scrap will be a gamechanger and is expected to drive prices. Many Japanese yards are holding material for Chinese buyers, while Japanese mills are concerned and are trying to procure more volumes. In 2017, China imported 1.81mn mt scrap from Japan.
The weekly Davis Index for #2 HMS rose by JPY3,545/mt to settle at JPY42,750/mt ($413/mt) fas amid rising offers. In the export market, the weekly index for the grade rose by JPY3,458/mt to JPY43,750/mt fob Japan. Deals concluded at around index price on fas basis this week.
Offers for Japanese #1 busheling (Shindachi) rose to JPY47,000-48,000/mt fob. The weekly index for the grade rose by JPY3,705/mt at JPY45,000/mt fas and up by 8pc or JPY3,500/mt at JPY47,000/mt fob Japan. Limited deals were heard at JPY44,000-46,000/mt fas this week. Few deals for #1 busheling and HS heard at $485-488/mt cfr Taiwan.
In the Kanto region, the Davis Index for #1 HMS settled at JPY43,875/mt fas port, up by JPY3,708/mt. The index for the same grade rose by JPY3,458/mt to JPY43,750/mt fob Japan.
The weekly Davis Index for HS and shredded grade rose by JPY2,583/mt and JPY2,333/mt to JPY45,000/mt fas and JPY44,750/mt fas, respectively. Deals heard at JPY44,000-46,000/mt fas in limited quantities, this week.
Yards offered Japanese HMS 1&2 (50:50), Wednesday, at $465-475/mt cfr Taiwan. The index for the grade rose by $47/mt to settle at $458/mt cfr Taiwan. In Vietnam, the index for Japanese HMS 1&2 (50:50) increased by $48/mt to settle at $463/mt cfr, with no trades heard. Offers for the grade rose to $465-475/mt cfr Vietnam on Wednesday.