Japan: Kanto scrap export tender set offers at new high, domestic prices follow cue

• Japan's monthly Kanto tender surges to $66/t m-o-m
  
  
• South Korean mills place highest bids
  
  
• Tokyo Steel lifts domestic scrap purchase prices by $26/t
  
  

A total of 10,000 tonnes (t) of scrap was awarded and the average price for H2 scrap stood at around JPY 63,510/t ($548/t) FAS, higher by JPY 7,665/t ($66/t) m-o-m, SteelMint learnt from sources informed about Japan's monthly Kanto Tetsugen scrap export tender for Mar'22 that was concluded today.

Notably, this time, South Korean mills remained winner of the Kanto tender. Second and third bidders were offered JPY 63,460/t ($548/t) and JPY 63,410/t ($547/t) respectively, but only 10,000 t of the first place were selected as successful bidders.

Japan's winning bid price seems to have risen significantly as the scrap prices have risen globally due to the Russian-Ukrainian war.

FOB prices for Japanese scrap exports are higher by $9-10/t vis-a-vis FAS prices. Post-the tender, the FOB price is around JPY 64,500/t levels.

Japanese scrap buyers' market overview:

• Japanese scrap export offers to South Korea were seen at an all-time high a week ago to JPY 57,000-58,000/t FOB levels, which are again lower than today's Kanto scrap export tender prices. However, buyers have raised their bids for Japanese scrap and won the monthly tender. Meanwhile, South Korean steel mills raise scrap buying prices for steel grade scrap, as per reports. POSCO's Gwangyang and Pohang plants will raise prices by KRW 10,000/t ($8/t), effective 7 Mar'22. Hyundai's Incheon, Dangjin will extend the purchase prices by KRW 12,000/t ($10/t), which was previously implemented till 7 Mar'22 and now extended to 14 Mar'22.
  
  
• Vietnam's scrap buyers have opted to wait and watch for the time being. Buyers are booking fresh cargoes as per requirement. Indicative imported bulk H2 scrap prices were heard at $580-590/t CFR levels at the beginning of the week. Increasing domestic rebar prices slowed down construction activities as owners faced losses. Hence, steelmakers would like to wait and watch the market situation, SteelMint learnt from sources.
  
  
• Bulk cargo buyers in Bangladesh stayed away from the Japanese market due to high freight rates and instability in the market, sources informed. Major mills have booked US-origin bulk scrap cargoes towards February-end. However, bulk H2 indications are at $700/t CFR levels after the sharp hike in Kanto bids.
  
  

Tokyo Steel hikes scrap procurement prices by over $25/t

Japan's Tokyo Steel raised scrap buying prices by $26/t after a gap of one month. Notably, the price is at a peak since 2017. Post-revision, the company's bid price for H2 scrap stands at JPY 60,000/t ($518/t) delivered to the Tahara and Utsunomiya plants, effective from 9 Mar'22.

Prices in JPY/t
Source: Tokyo Steel

Additionally, the mills have suspended domestic as well as export sales due to soaring prices of raw material, semis, and finished steel in Europe amidst the Russia-Ukraine crisis. The steel major, explaining the reason behind the suspension of sales, said: "It is necessary to determine at what levels the overseas market will stabilise".

Outlook: Considering today's Kanto result outcome, the winning bid price has set a high price. Thus, sources expect that export prices, as well as domestic prices in Japan will rise further. The tender serves as a benchmark for the Japanese scrap export market.