Japanese ferrous scrap prices to rise as bids in Kanto export tender surge by $61/t m-o-m

Japan's scrap export price trend-setter, the monthly Kanto Tetsugen ferrous scrap export tender for Oct'21 was concluded today on 12 Oct'21. A total of 11,000 tonnes (t) of Japanese H2 scrap was awarded to the winner at an average price of JPY 53,213/t ($469/t) FAS, SteelMint learnt from sources. The average bid price has moved up significantly by JPY 6,953/t ($61/t) m-o-m against Sept'21.

The average bids in the tender have hit multi-year highs, as per data maintained with SteelMint since Jun'16.

The bids fetched were higher than prevailing market prices. Hence, Japanese scrap prices are likely to rise further after today's tender outcome.

Key factors driving up the Japanese scrap market

• Vietnam's imported scrap market has witnessed a surge in offers on bullish sentiments. SteelMint's assessment for Japanese bulk H2 moved up to around $530/tonne (t) CFR Vietnam, up by $20-25/t w-o-w. However, no deals have been concluded at the cited offers, sources told SteelMint.
  
  
• South Asia's bulk scrap buyer, Bangladesh, extended its silence on bulk cargo bookings for yet another week. Bulk Japanese H2 scrap offers are at $570/t CFR Chittagong, an increase of $10-15/t CFR Chittagong. Bangladesh-based bulk scrap buyers surely consider UK/US-origin bulk cargoes but are not much interested in Japanese bulk cargoes due to increased freight rates and high offers.
  
  
• China's ferrous scrap import market remains quiet as deals have been reduced from Japan, as per the latest updates received by SteelMint. Offers for Japanese heavy recycled steel (HRS101) grade scrap were seen lasst week at $600-605/t on a CFR basis, up $25-30/t compared to the previous week. The disparity in bids and offers accounts for the lack of recent deals.
  
  
• South Korea's major Daehan Steel booked two bulk Japanese scrap cargoes last week. The cargo consists of H1 and H2 (50:50) at JPY 56,900/t CFR levels, equivalent to JPY 52,000/t FOB, against around JPY 47,000/t FOB towards Sept'21-end, registering a sharp hike of JPY 5,000/t. As per reports by SteelDaily, price difference between imported Japanese scrap and domestic scrap in South Korea have widened significantly.
  
  
• Domestic scrap prices in Japan's Kanto region hit 13-year high, as per data from Japan Metal Daily. Last week, Tokyo Steel declared a hike in scrap purchase prices for the third time in Oct'21 this week. The steelmaker raised bids by JPY 2,000/t ($18/t) only for its Utsunomiya plant. Post-revision, the company's bid price for H2 scrap will stand at JPY 53,000/t ($474/t) for the Utsunomiya plant.
  
  Prices in JPY
  Source: Tokyo Steel
  
  

Outlook

With the recent significant hike in the Kanto tender outcome, Japanese scrap export offers are likely to move up further. However, the deals from prominent buyers like Bangladesh and South Korea may slow down on discrepancies in bids and offers.