Japan: Bids edge down by JPY 1,226/t m-o-m at Kanto scrap export tender for Jun'24

At Japan's Kanto export tender today, approximately 25,000 tonnes (t) of H2 scrap were sold at JPY 51,364/t ($327/t) FAS, reflecting a decrease of JPY 1,226/t ($8/t) from the previous month reflecting weak overseas demand. The dollar conversion of the FAS price fell by $6-7/t m-o-m, primarily due to the yen's depreciation against the US dollar. Notably, the JPY is currently at a ten-year low, valued at JPY 157 per dollar. (It is equivalent to JPY 52,500/t on a FOB basis ($334/t)). Despite the JPY's depreciation, the price drop is attributed to sluggish demand in Asian markets. This marks the 10th consecutive month prices remained above JPY 50,000/t.

The export price of ferrous scrap from Japan's Kanto scrap export tender has declined for the first time in three months, marking its first drop since March.

As per market insiders, the auction received bids from all 15 trading companies, totaling 108,800 t, down 16,900 t from last month out of which two bids were successful for the June 2024 tender with the first successful bid at JPY 51,510/t FAS for 10,000 t, and the second successful bid at JPY 51,267/t for 15,000 t.

The FOB price is estimated to be around JPY 52,500/t ($334/t), equivalent to INR 27,894/t (FOB). One of the shipments with 15,000 t H2 scrap is expected to have been booked by a Bangladeshi mill. As a result, the CFR Chattogram price is estimated to be around $392-397/t. Similarly, another shipment with 10,000 t of H2 scrap was destined for a Vietnam-based buyer with shipping by 31 July 2024.

Notably, Japan's FAS prices are higher by JPY 1,064/t compared to the last recorded FOB prices. BigMint's weekly assessment indicates that Japan's H2 scrap export offer was at JPY 50,300/t ($332/t) FOB Tokyo Bay, marking a slight uptick of JPY 400/t ($3/t) compared to the previous week.

The impact of Tokyo Steel's Tahara plant, which reduced its purchase price of ferrous scrap due to damage to auxiliary facilities, has extended beyond the central region to affect the Kanto region.

Buyer-side updates:

Bangladesh: Bangladesh has resumed buying scrap at Japan's Kanto tender after a halt in May 2024. BigMint's weekly assessment of bulk H2 scrap declined by $6/t m-o-m to $398/t CFR Chattogram. Apart from Japan, Bangladeshi buyers were involved in Australia, and US-origin bulk scrap bookings.

Vietnam: For H2 grade scrap, the firm offers continued to decrease, reaching $370/t CFR Vietnam, down from previous levels of around $372-375/t. Despite sellers maintaining tradable and indicative offers at $365/t CFR Vietnam, market activity remained limited. Only one Vietnam-based mill made a bid at $370/t CFR for H2, with specific quality requirements. Meanwhile, BigMint's assessments indicate stability in ferrous scrap prices in Vietnam.

Taiwan: Prices remained stable as most participants were on the sidelines, following Taiwan's return from the Dragon Boat Festival, seaborne scrap prices diverged, with containerised HMS (80:20) offered between $345/t and $360/t CFR. Global scrap prices delivered to Taiwan diverged over the past week, persuading local mini-mills in Taiwan to hold their rebar list prices and buying prices for local scrap this week to wait and see the market changes, Mysteel Global was told. Japan-origin H2 scrap was reported at $357/t CFR Taiwan, being unchanged on the week, according to a local market source.

Outlook: Suppliers will be exporting materials amid expected summer production cuts which will decline domestic scrap consumption whereas the next auction is set for 10 July 2024.