Japan: Kanto scrap export tender winning bids fall by $26 in July

Kanto Tetsugan - Japan's monthly ferrous scrap export tender for the month of July'20 has concluded today (9th Jul'20). A total of 22,000t of Japanese H2 scrap was awarded at an average price of JPY 23,574/t ($220) FAS, as compared to JPY 26,360/MT (USD 246) in Jun'20. This month's average bid has dropped by JPY 2786/t ($26) against last month's bid.

After surging by a total of around $53/t in last 2 tenders (by $17 in May and $36 in June) the bids are now back to around May levels, with the fall being attributed to the easing of scrap supply against June and continued sub-par demand, weakening the domestic and export market of Japanese scrap.

Separately, the 2 winning bids were awarded 12,000t of H2 at JPY 23,600/t ($219) and 10,000t of H2 at JPY 23,542/t FAS, with FoB prices generally being around $10/t higher than FAS prices.

Amid Japanese scrap export prices falling sharply since mid-June, having collapsed by JPY 5000/t ($45-47/t) in last 3 weeks, Japanese suppliers had held back since earlier this week for fresh offers, waiting for Kanto result to provide further clarity on price level.

Now, with last bookings of Japanese H2 by Korean steelmakers having been closed at JPY 23,000-23,500/t FoB, and bids by major Korean mills including Hyundai Steel standing at JPY 22,500/t FoB level for H2, today's winning bids stand considerably higher than these recent deal' prices, up by at least $15/t, thus giving confidence to Japanese suppliers to resist further fall in prices.

Thus, Japanese export prices can surely now find support after today's result, while it remains to be seen, how buyers in Korean, Vietnamese and Taiwanese markets bid, in the coming days.

Domestic Scrap Prices

Meanwhile, following the recent crash in export prices, Japanese domestic scrap prices too had been in a sharp downtrend for 2 weeks, since June last week, having fallen by JPY 5000/t for Utsnunomiya plant in Kanto region and by JPY 2000-2500/t for the other 4 plants, in this period.

After observing 6 price cuts in last 2 weeks, the company is now paying, JPY 23,000/t ($214/t) for H2 scrap delivered to Okayama works, JPY21,500/t ($201) to Utsunomiya (Kanto) and JPY 22,500/t ($210) to Tahara works in Central Japan, which are significantly lower than the level suggested by today's Kanto result, indicating that no further price cuts may be witnessed in the coming days, especially for Utsunomiya works.