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

Japan’s monthly scrap export Kanto Tetsugen tender concluded Dec 11 with the average bid up by JPY1,497/mt ($14/mt) over the prior month. The tender saw a total of 23,000mt of scrap awarded, with the average winning bids at JPY25,804/mt ($237/mt) fas.  


The first winning bid came from the Hanwa Company at JPY26,100/mt, up from JPY1,640/mt the prior month. This was followed by the Itochu Company placing the second and third winning bids for 10,000 mt, each, at JPY25,760/mt fas, respectively.  


The increase in Japanese scrap prices comes on the back of increased demand. The equivalent FOB prices are usually JPY1,000/mt higher than fas levels. Japanese scrap prices are expected to strengthen further as steelmakers continue restocking ahead of the long holiday season for Christmas and New Year. 


Usually, 20,000 mt of ferrous scrap is auctioned at the Kanto tender every month, however, the volume awarded in the past two months has remained slightly higher. Market price for H2 scrap stands at JPY24,000-24,500/mt fas, and South Korean steel makers’ bids were at JPY25,000/mt fob Japan, suggesting there is room for Japanese scrap prices to increase by around JPY1,500/mt. 


Market participants fear that prices are less likely to remain strong in the long term, as the gap between H2 and high grade Shindachi scrap has narrowed to just JPY2,000/mt, against the usual JPY7,000-8,000/mt. This is mainly on weak demand from the automotive sector. 


With its latest price hike of JPY500/mt announced on Dec 7, Tokyo Steel is paying JPY24,500/mt ($225/mt) for H2 delivered Tahara and Utsunomiya plants, while bids for H2 into Okayama were unchanged at JPY24,500/mt. The company is expected to raise its bids further following the tender’s results.

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