Japan: Kanto scrap export tender witnesses marginal price uptick for Feb'24

The recent export bid at Japan's Kanto export tender today secured 15,000 tonnes (t) of H2 scrap at JPY 53,087/t( $355/t) on a FAS basis, indicating a slight increase of JPY 6/t m-o-m. The FOB price translates to approximately JPY 54,100-54,200/t ($362-363/t), equivalent to INR 30,045/t (FOB), with the shipment destined for Bangladesh.

According to BigMint's weekly assessment, Japan's H2 scrap export offer is at JPY 51,800-52,000/t ($346-348/t) FOB Tokyo Bay, marking a decline of JPY 1000/t ($7/t) compared to the previous week's JPY 53,000/t ($355/t) FOB.

This time, Tokyo Steel refrained from revising its scrap procurement prices, unlike the adjustments made after last month's bidding. Initially, Tokyo Steel had raised purchase prices at its Utsunomiya plant by JPY 2,000/t on 17 January. However, due to ongoing inventory control during factory maintenance, prices were subsequently reduced by JPY 2,000/t on 26 January, with purchases returning to normal recently.

Market observers are closely monitoring how the recent sideways price fluctuations will affect purchase prices among steel manufacturers in the Kanto region, particularly Tokyo Steel. Tokyo Steel's response to the high winning bid price is considered crucial, with potential implications for the broader market.

Price trends: The Kanto scrap market experienced a rebound in mid-January but later fell below the Kansai region. A solid export bid could potentially boost the Kanto market, but concerns about excess cargo persist.

Electric furnace manufacturers in the region are implementing restrictions on arrivals, while Totetsu Utsunomiya has resumed 24/7 receiving since 7 February. There's an expectation of a potential price increase by Totetsu, albeit limited to prevent another supply surge.

Buyer updates:

Bangladesh: In the last couple of months, Bangladesh has resumed as a consistent buyer of material from Japan's Kanto tender. However, last month, bulk scrap volume from Japan was not prominent apart from the Kanto tender, where a small volume was being captured by a Bangladeshi mill shared with Vietnam. Due to weaker domestic steel demand and challenges in foreign exchange reserves, buyers were facing problems. BigMint's weekly assessment of bulk H2 scrap edged down by a mere $2/t to $428/t CFR Chattogram.

Vietnam: The market was quiet as Vietnamese buyers are not keen on bidding due to the Lunar New Year holiday, while sellers are also reluctant to sell at low prices. Consequently, there is a gap between buyers and sellers that is unlikely to close until after the Lunar New Year, as per market insiders based in Vietnam.

South Korea: Hyundai Steel reduced electric steel mill purchase prices by KRW 10,000/t on 6 Feb'24. However, salvage company yard rate cuts are delayed until after the Lunar New Year. On 7 Feb'24 major southern region steel companies lowered prices, except POSCO, Dongkuk Steel, and Korea Special Steel. The market awaits their decisions, especially for Dongkuk Steel's Incheon Steel Works and Korea Special Steel. Major steel firms are cautious about price cuts due to low inventory. Korea Steel and Hwan Steel, starting facility repairs post-Lunar New Year, resist price reductions amid reduced demand. Winter maintenance at Hyundai Steel and Dongkuk Steel runs from late February to early March.

Taiwan: The steel scrap import market in Taiwan remained quiet on February 8 due to the start of the week-long Lunar New Year holiday, according to sources. Buying interest for imported scrap was already minimal earlier in the week, with rebar end users and mills postponing negotiations until after the holiday. Despite a recent deal for US-origin HMS (80:20) at $372/t CFR, the Taiwanese market remained subdued, with only desperate sellers considering such prices. Last week, transactions for US material were finalised within the range of $375-377/t CFR.

With the Lunar New Year holidays in the second week of February, the market is expected to remain calm. Limited supply is anticipated to support prices during this period. Sellers on the USA west coast of the USA have minimal inventory, which is expected to prevent the market from dropping below $380/t CFR, despite Taiwan's preferences.

Near-term outlook: The ongoing tender export price and Vietnam's absence during the Lunar New Year are expected to play a crucial role in shaping the market's near-term direction. While export demand is expected to remain moderate, worries persist regarding excess cargo, especially in the northern Kanto region, which has prompted electric furnace manufacturers to adopt a cautious approach. Domestic buyers' cautious stance adds to market uncertainty.