Japan's Kanto scrap export tender bids for Jul'24 down by $4/t m-o-m on JPY depreciation

At Japan's Kanto export tender today, approximately 14,000 tonnes (t) of H2 scrap were sold at JPY 52,168/t ($323/t) FAS, reflecting an increase of JPY 804/t ($5/t) from the previous month. On the other hand, after the dollar conversion, the FAS price fell by $4/t m-o-m as compared to JPY 51,364/t ($327/t) in June 2024 primarily due to the JPY's depreciation against the US dollar.

Notably, the JPY is already hovering at the lowest level valued at over JPY 161 per dollar. This marks the first price increase in two months and the 11th consecutive month above JPY 50,000/t.

Verbal interventions by the Japanese government have had minimal impact on the currency's decline and near-term export market dynamics.

Domestically, reduced connectivity with overseas markets complicated price adjustments, leading to an uncertain impact.

According to market insiders, Vietnam emerged as the winner in the recent Kanto tender.

A total of 16 bids from 15 trading companies were received, totaling 100,800 t, which is 8,000 t less than the previous month. Due to a strong sense of shortage among union members and limited market availability in the summer, only the first bid was successful. The shipping deadline is the last week of August.

No winning bids were submitted from Bangladesh, as buyers there have shifted their interest from Australia and the US for bulk scrap.

In a recent development, the union successfully shipped 15,000 t scrap to India in June, marking its debut export to the country. Vice Chairman Takashi Kaneda voiced satisfaction with this achievement, underscoring smooth operations and a positive reception in the new export market.

Buyer-side updates:

Bangladesh: Bangladesh has been absent from purchasing scrap at Japan's Kanto tender this time after active buying in June 2024. BigMint's assessment shows that bulk H2 scrap prices have remained largely stable m-o-m at $398/t CFR Chattogram. Apart from Japan, Bangladeshi buyers have been involved in US-origin bulk scrap bookings. Major mills not facing letters of credit (LC) issuance problems are likely to book a few US vessels this month, according to market participants.

Vietnam: For H2 grade scrap, firm offers have continued to decrease, now reaching $362/t CFR Vietnam, down by $10/t from previous levels of around $372/t. Despite sellers maintaining tradable and indicative offers at $368-370/t CFR Vietnam, market activity remains limited. The recent Kanto tender winner, Vietnam, is likely to receive the material at $355-358/t CFR. Market participants noted that demand from Vietnamese mills remained active last week. Although the market in Vietnam isn't strong, it has improved compared to the early months of the year.

Taiwan:Taiwanese mills limited scrap purchases due to a muted rebar market during the summer slowdown. Offers of Japanese bulk H1/H2 (50:50) scraps were offered at $359-360/t CFR Taiwan. US-origin HMS (80:20) was heard at $345-355/t CFR Taiwan, with bids at $340-342/t CFR.

Outlook: Domestic supply tightness is expected to persist due to slow generation caused by extreme heat. Recyclers may delay their shipments for July's Kanto tender volume as they are currently focused on fulfilling the previous month's Kanto tender volume. The next tender is likely to be scheduled for 9 August 2024.