On July 11, SteelOrbis reported the top three highest Tetsugen auction bids at JPY 28,010/mt ($246/mt) FAS or JPY 29,000/mt ($255/mt) FOB Tokyo Bay, and average for all auction winners at JPY 27,350/mt ($240/mt) FAS or approximately $250/mt FOB Tokyo Bay. Yet, following the auction several large South Korean mills continued bidding at JPY 26,000-26,500/mt ($229-233/mt) FOB Tokyo Bay on market uncertainty.
According to sources close to SteelOrbis, the stronger US market is providing positive support to the Japanese H2 scrap market this week. US containerized HMS I/II 80:20 is on offer at $272-280/mt CFR to Taiwan and South Korea from the US West coast. Mirroring price levels on the East coast to destinations such as Turkey, bulk HMS I/II 80:20 cargoes are at $298-300/mt CFR on the West coast for Taiwan and South Korea.
As a result, South Korean mills have not been heard purchasing US bulk scrap as it is considered too expensive. Instead, South Korean mills have increased their bids to attract volume in the Japanese H2 scrap market from export traders.
South Korean mills increased bids by approximately JPY 2,000-2,500/mt to JPY 28,000-28,500/mt ($250-255/mt) FOB Tokyo Bay to better attract sellers who were offering bulk H2 scrap at JPY 29,000-29,500/mt ($259-264/mt) FOB Tokyo Bay. The bid price translates to roughly $273-278/mt CFR South Korea compared to offers of $282-288/mt CFR South Korea. South Korea’s largest EAF mill was heard booking approximately 65,000 mt in the last few days at the top of the bidding range. Compared to July 11, bids by South Korean firms in FOB terms increased by $21-22/mt.
With increased domestic H2 prices in Japan of JPY 27,500-28,000/mt ($246-250/mt) delivered to mills and the purchase of H2 scrap for export at approximately 27,500/mt ($246/mt) FAS, H2 exporters are increasing export offers again closer to JPY 29,500-30,500/mt ($264-273/mt) FOB Tokyo or approximately $287-295/mt CFR South Korean level, which are still more attractive than the US West coast bulk offers on HMS I/II 80:20.
$1=JPY 113.74, 7/11/2017
$1=JPY 111.87, 7/20/2017