Japan: Bids edge up by JPY 987/t m-o-m at Kanto scrap export tender for Apr'24; ; JPY depreciation devaluates export prices
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Around 15,000 tonnes (t) of H2 scrap was sold at Japan's Kanto export tender today at JPY 51,087/t ($333/t) FAS, marking a slight rise of JPY 987/t ($7/t) compared to the previous month. Although the dollar conversion of FAS price declined by $2-3/t m-o-m due to a sharp depreciation in JPY as against the US dollar.
The recent increase in winning bid price, the first in two months, can be attributed to the depreciation of JPY and heightened overseas demand, particularly from Bangladesh, Vietnam, and Taiwan, following the end of Ramadan. The efforts to restock in Turkiye and other countries post-Ramadan also influenced the bid price.
The FOB price is estimated to be around JPY 52,000-52,500/t ($341-344/t), equivalent to INR 28,713/t (FOB). The shipment is expected to have been booked by a Bangladeshi mill. As a result, the CFR Chattogram price is estimated to be around $390-395/t.
Notably, Japan's FAS prices are higher by JPY 487/t compared to the last recorded FOB prices. BigMint's weekly assessment indicates that Japan's H2 scrap export offer was at JPY 50,600/t ($332/t) FOB Tokyo Bay, marking a slight uptick of JPY 400/t ($3/t) compared to the previous week.
The depreciation of the Japanese yen (JPY) has contrasting effects on exporters and importers. For exporters, a weaker JPY benefits them as their products, including scrap, become more competitively priced for international buyers. This may lead to increased demand and potentially higher profits when selling in JPY terms.
Conversely, importers benefit from a weaker JPY as they can purchase Japanese scrap at a lower cost in their own currency. For instance, during the second week of April 2024, with the Bangladeshi taka (BDT) standing at 109.5 against the USD and the JPY at 153.28, importers from countries with stronger currencies could take advantage of the favourable exchange rate to procure Japanese scrap more affordably.
In this Kanto tender, 17 bids totaling 97,100 t were received, with the material shipment deadline set around the last week of May (31 May 2024).
Furthermore, Tokyo Steel, a prominent Japanese mill, has not announced any price changes for their domestic ferrous scrap purchases. The last adjustment was made on 13 March this year.
Buyer-side updates:
Bangladesh: After a month's pause, Bangladesh has resumed buying scrap at Japan's Kanto tender. However, due to weaker domestic steel demand and challenges in foreign exchange reserves, buyers are facing problems. BigMint's weekly assessment of bulk H2 scrap remains stable w-o-w at $392/t CFR Chattogram. Apart from Japan, Bangladeshi buyers were involved in Singapore, Australia, and US-origin bulk scrap bookings.
Vietnam: Driven by sluggish steel sales and a depreciating Vietnamese currency, steelmakers relied on domestic scrap, with prices for domestic heavy melting scrap at $355-360/t. Tighter scrap availability led to a slight increase in US offers of bulk HMS (80:20) to $390-395/t CFR Vietnam, while Australian offers remained steady at $380/t. Bids for HMS (80:20) were unchanged at $375-380/t CFR Vietnam.
South Korea: Major steelmaker's ferrous scrap inventory has seen a notable decline in the second week of this month, a departure from the prolonged trend of stability or growth. This shift coincides with widespread price cuts extending to the southern region and stricter warehouse controls in metropolitan areas. Industry analysts attribute this development to sluggish demand for ferrous scrap and an unusual inventory disparity compared to previous years. Despite ample product stocks, many factories are operating at reduced capacity, further driving the inventory decline.
Taiwan: Taiwan's Feng Hsin maintained domestic scrap and rebar prices unchanged this week after the Qingming Festival holiday. The company's bid price for domestic HMS (80:20) scrap remained at T$11,500/t ($357/t), while downstream rebar prices held steady at T$18,900/t. Despite an earthquake on 3rd April, steelmakers' operations were largely unaffected. Market sources anticipate stable prices in the short term, with offers for HMS (80:20) containers at $360-365/t CFR Taiwan and a bid at $360/t CFR Taiwan recently.
Outlook: Industry insiders have confirmed that the 5,000 t shipment secured under the March contract will be executed from the 13th to the 17th of this month. Looking ahead, the next bid is slated for 9 May 2024. It's worth noting that May's Golden Week might result in fewer working days, potentially influencing bidding activity.
