Bids at Japan's Kanto scrap export tender fall by $17/t in Dec'22

Around 13,000 t of scrap was awarded and the average price for H2 scrap stood at around JPY 47,568/t ($349/t) FAS at Japan's bellwether Kanto Tetsugen scrap export tender, SteelMint learnt from sources.

Lower bids from participants resulted in the tender remaining inconclusive in November for the second time this year after May. In December, prices fell by JPY 2,297/t ($17/t) from JPY 49,865 ($341/t) FAS in October.

In the month under review, the deals concluded were in three small slots, out of which the second and third were 5,000 t each which were concluded at JPY 47,610/t FAS ($350/t) and JPY 47,442/t FAS ($349/t), respectively. Both were heard booked by Vietnamese mills. The highest bid was awarded just 3,000 t at JPY 47,710/t ($351/t) FAS to a Taiwanese steel mill.

FOB prices for exports of Japanese material are higher by around $9-10/t compared to FAS prices. The Kanto tender serves as a benchmark for the Japanese scrap export market. Hereafter, Japanese suppliers are likely to keep their export offers higher as the demand in the domestic market is higher than the overseas markets, SteelMint notes. Suppliers are now targeting fresh offers at around JPY 48,000/t ($353/t) FOB.

The Japanese Yen is trading at 136.1 in the currency exchange market, recovering 145.34 recorded a month back on 9 November.

Buyers' market silent

• South Korean mills postpone bookings: As the strike by truck drivers in South Korea enters its 16th day on Friday, the country's steelmakers are growing increasingly concerned about its impact on their business and the domestic steel market. The strike, which began on 24 November, involves unionised truck drivers under the Cargo Truckers' Solidarity Union over their demands that a temporary scheme that guarantees minimum cargo rates for truck drivers be made permanent.
  
  

Hence, the mills are cautious about booking any fresh slots due to the disruption in supply chain and subdued domestic market.

• Bangladesh struggles with LC issues: Major Japanese scrap buyer, Bangladesh, is struggling with LC opening restrictions. Market participants shared that no bulk cargo was booked in the last couple of weeks. However, indicators for Japanese H2 scrap are at $400/t CFR, which are likely to increase further after today's Kanto tender outcome.
  
  
• Vietnamese mills book small volumes: Vietnam's imported scrap market has been mostly quiet due to subdued finished steel demand. However, two small parcels were booked by Vietnamese mills. Indicative offers for Japanese bulk H2 scrap were heard at $380-400/t CFR.
  
  

Tokyo Steel keeps bids unchanged: Japan's major EAF steelmaker, Tokyo Steel, has kept its domestic scrap purchase prices unchanged over the past 10 days. The company lowered its bids for H2 scrap by JPY 500/t ($3/t) for all plants on 29 November. Post-revision, prices of H2 scrap are at JPY 48,500/t ($336/t) delivered to the Tahara plant and JPY 49,500/t ($343/t) for the Utsunomiya plant.

Outlook: Leading Japanese scrap buyers such as Vietnam and South Korea may remain quiet due to uncertainty in their domestic markets. However, Japanese suppliers are likely to keep their offers higher to meet domestic demand.