Japan: Bid prices up mere JPY 2/t m-o-m in Kanto scrap export tender in Nov'23

Japan's Kanto Tetsugen scrap export tender for November 2023 concluded today with bids edging up by a mere JPY 2/tonne (t) compared to those received in October. A total of 18,000 t of H2 scrap was awarded at an average of JPY 50,238/t ($332.8/t) FAS. Although the company that won the bid has not been accurately confirmed, but it is said that out of this 18,000 t, one parcel of 15,000 t was destined for Vietnam at JPY 50,286/t ($333.2/t), and the rest of 3,000 t was destined for a Taiwanese-based company at JPY 50,000/t ($331/t).

It is noteworthy that Japan's FOB prices are nearly lower by $9/t in comparison with FAS prices. SteelMint's weekly assessment of Japan's H2 scrap export offer stands at JPY 48,900/t ($324/t) FOB Tokyo Bay, up by JPY 600/t ($4/t) in comparison with JPY 48,300/t ($320/t) in the previous week.

Domestic market

Steel scrap prices in Japan fell slightly for the first time in three weeks. According to the Japan Iron and Steel Association, the average scrap price in three regions of Japan in the second week of November stood at JPY 47,100/t, down by JPY 300/t from the previous week. The average scrap price in the Kanto region was assessed at JPY 49,200/t, down JPY 500/t from the previous week, marking the biggest drop.

In the central region, scrap prices were recorded at JPY 45,300/t, down JPY 100/t from the previous week, and the Kansai region also recorded JPY 36,900/t, down JPY 100/t w-o-w.

The Japanese domestic market has continued to be somewhat stronger compared to the export market, but the domestic market is also turning somewhat weaker.

Buyer side updates

Bangladesh: In the last few months, Bangladesh has been observed as a consistent buyer of material from Japan's Kanto tender. However, this month Bangladesh's mills are facing issues related to the opening of letters of credit and upcoming elections in January, which have also impacted the overall imported scrap market. SteelMint's weekly assessment of bulk H2 scrap edged up by a mere $1/t to $405/t CFR Chattogram.

Vietnam: Vietnamese buyers are showing little interest in imported scrap as they find more favourable terms in the local market. Imported prices have softened slightly, with limited demand observed for Hong Kong and Japanese materials. Japanese H2 scrap is being offered at $375/t CFR but is considered uncompetitive. Northern mills can purchase the same grade locally at $10-15/t lower, making imports unappealing. Japanese high-grade scrap is available at around $400/t CFR.

South Korea: South Korean mills were disinterested in procuring seaborne scrap amidst the availability of cheaper material in the domestic market. Moreover, major Korean mills have reduced scrap purchase prices twice this month. A price cut was implemented by KRW 10,000/t on 1 November and another of KRW 10,000/t with effect from 8 November.

Outlook

Japan's H2 scrap export offers may remain volatile as traditional import markets such as Vietnam, South Korea, Taiwan and Bangladesh are currently not procuring much of the imported material due to various challenges such as cheaper availability in the domestic market, bid-offer disparities and LC-related challenges.