Japan: Kanto tender bids drop $11/t m-o-m, but still stay above market prices

Japan's bellwether monthly Kanto Tetsugen ferrous scrap export tender for Aug'21 was concluded today. A total of 13,000 tonnes (t) of Japanese H2 scrap were awarded at an average price of JPY 46,646/t ($423/t) FAS, SteelMint learnt from trade sources. The average bid fell by JPY 1,242/t ($11/t) m-o-m, while the prices have reportedly weakened for the second consecutive month.

A volume of 3,000 t was awarded to the first bidder at an average price of JPY 47,183/t. Another 5,000 t, at JPY 46,920/t and another 5,000 t at JPY 46,050/t FAS were awarded in today's tender.

Though the bids fell on a monthly basis, these were higher than the prevailing market prices, which shows that chances of a price correction are slim in the Japanese scrap export market in the short term.

Meanwhile, the bid prices are higher by JPY 1,146/t as compared to Hyundai Steel's bids reported a week ago at JPY 45,500/t FoB levels.

Around 15,000-20,000 t of H2 scrap are sold monthly, through the Kanto tender auction and the FoB prices for the same are higher by around $9-10/t vis-a-vis FAS. The tender serves as a benchmark for the Japanese scrap export market.

Deals to Vietnam and Bangladesh remain limited: The two major Japanese scrap buyers, Vietnam and Bangladesh, expect price correction for Japanese H2 scrap. Notably, no major deals were reported for Japanese scrap in the last few weeks, whereas, buyers continuously bidat lower levels to pull down the higher offers.

• Fresh offers for bulk Japanese H2 are being offered at $470-475/t CFR Vietnam. Trade activities have remained low as the country continues to witness limited domestic steel trade on rising Covid cases.
  
  
• Indicative offers for bulk H2 were heard at around $535-540/t CFR Chittagong for H2 grade scrap for Bangladesh. Notably, Bangladesh mills were under strict lockdown till last week due to surge in Covid cases.
  
  
• Chinese buyers would like to shift to other scrap sources like South Korea, due to high offers for Japanese scrap. Meanwhile, increased freight rates have put scrap buyers in 'wait and watch' mode. Currently, offers for Korean P&S scrap are being quoted at $560/t CFR levels, while bids are around $540/t CFR, said a Chinese scrap trader.
  
  

Japan's Tokyo Steel cuts scrap purchase prices by up to $10/t: Japan's leading EAF steel mill, Tokyo Steel, has reduced scrap purchase prices for the third time in Aug'21 today. The company has decreased prices by JPY 500-1,000/t ($5-10/t) for two of its steelworks, excluding the Utsunomiya plant.

After today's revision, the company would pay a bid price for H2 scrap at JPY 48,500/t ($442) for Tahara works.

Tokyo Steel scrap purchase prices

Prices- JPY/t
Source-Tokyo Steel

Outlook
The most awaited Japanese scrap export tender has now been declared. It is expected that Japanese scrap export offers may not fall and market activities would pick up in the near term, which were slow till now due to the Tokyo Olympics.