Japanese scrap exporters have become more confident in further sharp price increases after the Kanto Tetsugen tender was closed with a $35/mt hike compared to last month at the level last seen in August 2019.
On August 19, the monthly Kanto Tetsugen scrap export tender in Japan was closed with a JPY 3,642/mt ($34.6/mt) hike compared to last month's results. The average price at the auction was JPY 27,216/mt ($259/mt) FAS, which is in line with the moods of market sources “as it was expected to exceed JPY 27,000/mt,” one of Japanese suppliers said. This average price on FAS basis translates to JPY 28,216/mt ($268/mt) on FOB basis.
The total volume sold in three lots was 22,000 mt: the first contract was for 15,000 mt at JPY 27,285/mt FAS or $268.89/mt FOB. Though there has been no final confirmation, some source said that it has been for Bangladesh. The second deal was done for 5,000 mt at JPY 27,070/mt FAS (or $266.85/mt) to Vietnam. And the third – to South Korea for 2,000 mt at JPY 27,060/mt FAS ($266.76/mt FOB).
The results of Kanto tender have been awaited in the market as they are showing the direction for the further price development. Major customers of ex-Japan scrap have been forced to increase bids in the current conditions, though a number of importers have been still quoting at lower levels than in the auction.
The price for Bangladesh has been said to be the highest in the market nowadays. The deal to Vietnam under the Kanto tender has been assessed at $302-305/mt on CFR basis by market sources, which is much higher than the tradable value of $280/mt CFR for H2 last week. Most sources said that though customers will have to accept higher prices, most of them have been considering the price at $300/mt CFR and above for Japanese H2 scrap as too high so far.
In response to the tender results, Hyundai Steel has announced its new bids for Japanese scrap at a higher price level. In particular, its bid for H2 scrap has been set at JPY 27,000/mt FOB, for H1/2 50:50 – at JPY 27,500/mt FOB, for HS and shredded scrap – at JPY 29,500/mt FOB. Another S. Korean steelmaker POSCO has been bidding at JPY 32,500/mt CFR for HS scrap from Japan, which is equivalent to around JPY 27,500/mt FOB for H2 scrap, sources have said. It means that the major steelmakers in South Korea have increased bids much, but have been still not ready to accept the price at JPY 28,000/mt FOB, fixed in the Kanto tender. Sources said that the deal in Kanto auction to South Korea has been for just 2,000 mt and probably for a trader’s position.
Ex-Japan H2 workable prices have increased to JPY 27,000-28,200/mt ($257-267/mt) FOB this week, up by JPY 2,100/mt ($20/mt) on average from last week and the range is expected to narrow with more deals in the near future.
