On April 11, SteelOrbis reported prices declining in the Japan-based Kanto Tetsugen’s H2 grade scrap tender. On May 9, SteelOrbis reported sources considering the possibility of a downward trend per corresponding seasonal movements in 2017, but also noting the recent improvements in Japanese domestic H2 prices.
Sources inform SteelOrbis that the Tetsugen auction took a direction opposite the seasonal expectations and increased in May. The highest two bids averaged at JPY 34,290/mt FAS ($314/mt). Compared to JPY 33,210 ($310/mt) FAS in April, prices for the highest May bid increased by JPY 1,260/mt and reached JPY 34,470/mt ($315/mt) FAS. The price increase in domestic terms was dampened in dollar terms to an increase of $5/mt due to currency fluctuations. The 120,000 mt of scrap traded for an average price of JPY 33,341/mt ($305/mt) in the May auction.
Domestic pricing is reportedly more attractive than export levels. Export offers of JPY 34,500/mt ($316/mt) FOB Tokyo Bay are lower than the JPY 35,500/mt ($325/mt) FOB that would have been equivalent from the highest bid. A source noted that this year has other variables compared to last year, adding to the already difficult task of forecasting accurately. However, with the positive auction results, support for export prices, tight global scrap market, and positive economic overviews for the remainder of the year, June prices look poised for upward shifts barring a surprise.
USD = JPY 107.03 (Apr 11)
USD = JPY 109.34 (May 10)