Japan: Bids in Kanto Monthly Scrap Export Tender Edge Up by USD 5/MT
Mining News Pro - Amid strict quality control, tightened supply in summer and restocking ahead of Obon holidays Japanese scrap prices have turned strong.
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As per recent updates received from sources, ‘Kanto Tetsugen`- monthly ferrous scrap export tender for Aug’18 concluded today (on 09th August) in the Kanto region in Japan. The average bids for Aug’18 recorded at JPY 34,860/MT (USD 315), FAS. On monthly premises, bids have edged up by JPY 530/MT (USD 5) M-o-M as against the average bids fetched at JPY 34,330/MT (USD 310),FAS in Jul’18. Following which Japanese scrap prices in Kanto and Gulf region seem to be strengthening further amid heavy summer and tightening supply.

In Aug’18 auction, total 15,000 MT of Japanese H2 scrap was awarded winning bid placed. Monthly around 20,000 MT H2 get auctioned through this tender. It is also to be noted that FoB prices for the same are higher by around USD 9-10/MT than FAS (free alongside ship) prices.

What could be the impact of this?

Following increase in Kanto bids fetched for this month, Japanese domestic scrap prices are likely to remain firm in the upcoming days. EAF steelmakers are operating 24 hours per day ahead of obon holidays as electricity prices are low. However, export prices are likely to move up which are assessed at around JPY 35,000/MT, FoB which is still lower by JPY 700-1000/MT than sellers’ expectations.

What happened in Japanese scrap market in the last month?

Japan’s leading EAF steel mill Tokyo raised prices twice in July for all grades delivered to its three plants in Western Japan. Prices moved up by JPY 1000-1500/MT (USD 9-14) narrowing the price gap between Utsunomiya plant and Western Okayama plant to JPY 2500/MT (USD 23) for grade H2 in Japan. Currently Tokyo Steel fetches H2 scrap at JPY 35,500/MT for Utsunomiya and JPY 35,000/MT at Tahara works as per last update on 04th August. The steelmaker also witnessed maintenance activities towards end of July at all its plants.

South Korean Hyundai Steel kept bids for H2 unchanged at level of JPY 33,000/MT (USD 297), FoB Japan despite rise in Japanese prices. The steelmaker booked scrap from USA and Russia instead of costlier Japanese H2 suspending bids for couple of weeks in July, however, the demand for high grade Japanese scrap remain firm from South Korean steelmakers.  

Moreover, couple of bulk vessel bookings from USA by South Korea`s leading steelmakers like Hyundai and Dongkuk steel resulted in less purchases from Japan. On the other hand, improving finish steel in South Korea kept Japanese sellers optimistic about export offers amid tightening supply in Japan.

In last one month’s time, USD/JPY exchange rate kept fluctuating in the range of 110.5 to record high 113. JPY stands at 110.7 today which was trading at record high 113 levels in the mid of July.

 

 


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