Shortage of domestic scrap in Japan and the rise in Kanto tender prompted exporters to raise offers. Also an anticipated rise in scrap demand post-holidays in South Korea, Taiwan and Vietnam supported offer prices. Most mills were away this week after limited buying for stocking ahead of annual maintenance.
Japan’s monthly Kanto Tetsugen export tender on Feb 10 concluded with the only winning bid for 15,000mt #2 HMS at JPY39,271/mt ($375/mt) fas Tokyo bay. The bid was JPY5,480/mt or $52/mt down from January’s average of JPY44,751/mt ($430/mt) fas but was still higher than what the market expected. Japanese scrap prices have rebounded by JPY5,000-6000/mt from the first week of February.
Traders raised offers for HS by $10/mt to $450-460/mt cfr this week as raw material prices rose in China. Australian iron ore price for 62fe rose by $3/mt to $163.5/mt on Monday. Bids for Japanese HS rose by $40-50/mt this week to $440-450/mt cfr but no trades heard. Chinese mills are expected to increase purchase volumes post-holidays, said traders. HRC manufacturers in China were cautious of a possible cut in rebates to 8-9pc from 13pc to curb steel output, which is expected to further pressure raw material prices in China.
The index for P&S 5ft (small bulk) China port settled at $450/mt cfr, up by $49/mt from the prior week on raised bids. The weekly Davis Index for Japanese #2 HMS rose by JPY2,250/mt to JPY35,750/mt ($319/mt) fas, while the index for the grade on fob basis rose by JPY3,250/mt to JPY38,500/mt fob Japan.
After Kanto bids, traders raised offers for #2 HMS to JPY40,000/mt, up by JPY4,000/mt from last deals of Hyundai and Dongkuk at JPY35,000/mt in the prior week.
Bids for Japanese #1 busheling (Shindachi) rose by JPY2,500/mt to JPY41,250/mt fob from a week ago. The weekly index for the grade rose by JPY1,875/mt at JPY39,125/mt fas Japan. Most Asian mills limited buying this week as offers rose more than their expectations and preferred to wait till the end of holidays. With Turkish mills raising scrap purchase volumes as well as prices and the index rose by almost $1/mt to $398.33/mt on Tuesday from Feb 8, many traders are expecting a rise in global ferrous scrap prices next week.
The weekly Davis Index for HS and shredded, Wednesday, rose by JPY3,750/mt and to JPY40,000/mt fas, respectively. Limited trades were heard this week as most mills waited for the results of Kanto tender.
Offers for HMS 1&2 (50:50) rose by $20/mt to $395-400/mt cfr Vietnam this week. After Kanto bids, the index for the grade rose by $11/mt to $389/mt cfr Haiphong. Buyers resisted offers and were cautious of rising prices.
In Taiwan, the index for Japanese HMS 1&2 (50:50) rose by $13/mt to $381/mt cfr. Offers rose to $385-390/mt cfr on Wednesday, up by $20/mt from the prior week.
Buyers from Vietnam, Korea and Taiwan have either paused trades or are in negotiations with Japanese exporters. Most buyers are expected to stay away from the market until next week amid Lunar New Year holidays. As expected by market participants, the decline in Japanese scrap prices was short-lived. Prices are expected to rise in February amid a global shortage of scrap and increased finished steel demand post Chinese New Year holidays.