Japan: Kanto scrap export tender bids for Dec'24 drop by $16/t, hit nearly 4-year low

• 15,000-t H2 scrap sold to Chattogram-based buyer
  
  
• Bids fall on continued lack of demand, weak buying
  
  

The Japanese Kanto H2 scrap export tender, which concluded today, saw a slight drop in bids, both in JPY and dollar terms. Dollar-denominated bids declined by $16/tonne (t) compared to November's tender, driven by a cautious seaborne market.

The winning bids stood at around JPY 42,739/t ($280-281/t), levels last seen in March 2021 (JPY 42,796/t), 3 years and 9 months ago. This indicates that the market remains under pressure with weak buying activity. The decline in the winning bid price was attributed to weak overseas scrap demand, driven by elevated Chinese steel and semi-finished exports

At the end of November, the JPY was at 155-156 against 1 USD, and now it is at 151-152 against 1 USD. JPY 42,739/t, when converted from JPY to USD at the earlier rate, comes to be $276/t, while it is $280-281/t at the current levels.

The auction attracted bids from all 15 participating trading companies, with a total bid volume of 97,700 t, down 22,000 t from the previous month and below 100,000 t for the first time in eight months.

Approximately 15,000 t of scrap were likely booked by a Chattogram-based mill at JPY 42,739/t ($280-281/t) FAS, reflecting a drop of $16/t (JPY 2,441/t) from November's price of JPY 45,180/t ($296/t), with shipment by 31 January 2024.

Sources indicate that FAS levels, currently at $280-282/t, would translate to approximately $290-295/t on a FOB basis. Ocean freights remain high due to vessel shortages, with 15,000 t to Bangladesh possibly costing $55-60/t. When factoring in CFR, the price would reach $350-355/t.

Notably, Japan's last recorded FOB prices are JPY 239/t below current FAS prices.

BigMint's weekly assessment indicates that Japan's H2 scrap export offers were at JPY 42,500/t ($279/t) FOB Tokyo Bay last week.

Japan's Tokyo Steel revised its scrap procurement prices for the first time this month, following the Kanto tender results. The previous price revision was on 29 October 2024.

Prices remained steady across most plants, except for Kyushu, where they dropped by JPY 1,000/t ($7/t), effective 12 December 2024. Post-revision, H2 prices at the respective plants stand as follows: JPY 41,500/t ($274/t) at Tahara, Okayama, and Utsunomiya; JPY 40,500/t ($267/t) at Kansai and Kyushu; and JPY 40,000/t ($264/t) at Nagoya and Takamatsu.

The price gap between domestic scrap in the Kanto region and Kanto export tender bids has narrowed to less than JPY 2,000/t, compared to JPY 3,680/t in November

Buyer-side updates

Bangladesh: Demand for imported scrap in Bangladesh remained weak, with buyers largely on the sidelines due to ample finished steel stocks and sluggish demand in project sectors. Mills operated at reduced production levels as end-user demand continued to lag. However, larger mills based in Chattogram made regular scrap bookings to maintain limited operations. In recent weeks, billet and rebar prices have sharply dropped, as mills aim to destock excess steel inventories.

Vietnam: The market remained subdued with weak demand, as participants adopted a cautious stance. In Vietnam, imported scrap demand showed no improvement, and local producers held large stocks due to sluggish sales of long products, influenced by poor construction activity. Japanese H2 scrap prices remained firm, with offers at around $335/t CFR Vietnam, but buyers were hesitant, quoting below $330/t CFR due to high freights. Despite the slow demand, suppliers were reluctant to reduce their prices.

Taiwan: Imported scrap prices delivered to Taiwan continued to weaken. Japanese H2 also decreased by $5/t to $310/t CFR. Despite these declines, Taiwanese mini-mills are not rushing to reduce local scrap procurement prices or adjust rebar prices. They plan to monitor market trends in the coming weeks, with some indicating that global scrap prices may have bottomed out after a steady decline.

Outlook

Japanese H2 scrap export prices are expected to rebound slightly in the short term with some demand from major buyers.

Chairman Minami informed that the price aligned with expectations and credited the slight premium over Gulf prices to the strong reputation of the brand and favourable currency movements. The next auction is scheduled for 10 January 2024.