H2 scrap declines during May Tetsugen scrap auction

SteelOrbis reported the early April Kanto Tetsugen scrap auction in Japan for May shipment, with the highest bid for H2 scrap at JPY 27,380/mt ($247/mt) FAS and the average bid price at JPY 26,426/mt ($239/mt) FAS. Since then, export prices declined through the remainder of April and dipped sharply in early May, although there has been a slight rebound in deals early in the week of May 8.
 
The May Kanto Tetsugen scrap auction closed today and provided mixed information in the market. On the one hand, the highest bids decreased in relation to the April scrap auction to JPY 24,600-25,000/mt ($215-219/mt) FAS for June shipment and the average bid price on the 130,000 mt volume declined to JPY 23,600/mt ($206/mt) FAS. On the other hand, the proximity of the higher offers which translate to approximately JPY 26,000/mt ($227/mt) FOB Tokyo Bay are within the latest offer range sought by export traders- though at the bottom of the range- and higher than initial expectations.

 

The average bid price decline of JPY 2,826/mt is more pronounced than the difference on the high bids, which due to exchange fluctuations is $33/mt in dollar terms. But sources note that the decline was influenced by the rapid decrease in purchase prices for H2 export scrap at the docks, which are presently heard at JPY 22,000-23,000/mt ($193-201/mt) FAS. This price rapidly dropped by JPY 2,000/mt ($22-23/mt) compared to prices reported in late April which were equivalent to $215-224/mt. According to a source, the low purchase price for export scrap will probably increase to ensure supply flows, and the volatility may keep exporters seeking equilibrium. As a result of the auction, export offers are being heard adjusting down JPY 500 ($4/mt) from the top of the range to JPY 26,000-26,500/mt ($228-232/mt) FOB Tokyo Bay.
 
$1=JPY 110.86, 4/05/2017
$1=JPY 114.27, 5/10/2017