Japan's Monthly Scrap Export Tender Bids Hit 5-Months Low

Japan's monthly ferrous scrap export tender - Kanto Tetsugen for Apr'18 has recorded average bids down by USD 42/MT M-o-M amid plunge in Japanese scrap prices.

As per recent updates received from sources, 'Kanto Tetsugen'- monthly ferrous scrap export tender concluded today (on 11th April) in Kanto region in Japan. The average bids for Apr'18 recorded at JPY 32,979/MT (USD 308), FAS. The average bids fetched in Apr'18 have decreased significantly by JPY 4,541/MT (USD 42) on M-o-M basis as against the average bids at JPY 37,520/MT (USD 350) in Mar'18.

The average bid recorded in Apr'18 hit last five months low as earlier to this, lowest bids fetched was at JPY 31,890/MT in Nov'17. Moreover, average bids recorded in Apr'18 descended lowest so far in CY18.

In the Apr'18 auction, 21,000 MT of Japanese H2 scrap was awarded through three winning bids placed. H1 bidder fetched 6,000 MT at JPY 33,210/MT (USD 310), FAS followed by H2 bidder at JPY 33,040 MT (USD 309), FAS for 5,000MT and H3 bidder stood at JPY 32,210 MT (USD 301), FAS for remaining 10,000 MT scrap respectively. It is to be noted that FoB prices for the same are higher by around USD 9-10/MT than FAS (free alongside ship) prices.

In Mar'18 tender, H1 bid was recorded at JPY 37,570/MT (USD 351).

According to data maintained with SteelMint, the price gap between average bids of two successive months Mar-Apr'18 has recorded high in last 1 year which was last recorded highest at JPY 5,117/MT in Feb-Mar'17.

It was expected by most of the traders and sellers that the bid prices for Kanto would fall sharply owing to weakened global scrap prices. Another reason behind falling scrap export prices from Japan could be lowered demand, especially from South Korean steelmakers over sharply rising steel inventories in hand with them. Also, domestic scrap prices in South Korea have come down sharply, resulting in price cuts in scrap purchase by the major mills like Hyundai Steel, Dongkuk Steel etc.

Following the lower prices fetched in Kanto Tetsugen, Japanese domestic scrap prices are expected to decrease further. Bids recorded in Kanto Tetsugen for Apr'18 pulled Japan's domestic H2 scrap prices assessment down by JPY 500/MT in the range of JPY 32,500-33,500/MT (USD 304-313) at Kanto region. Tokyo Steel mill fetches H2 at JPY 35,000/MT for its Tahara work in central region while JPY 33,500/MT at Utsunomiya works in Kanto region respectively. The latest bids placed by South Korean steel mills for Japanese H2 scrap is at JPY 35,000/MT, FoB Japan.

In CY16, Total 245,000 MT ferrous scrap was exported from Japan through this tender out of which Vietnam ed 220,000 MT occupying 89% share followed by Taiwan (15,000 MT) and Korea (10,000 MT) respectively.

What is the Kanto Tetsugen export tender?
Kanto Tetsugen Cooperative Association was established in Nov'2001 to make the joint export of steel scrap to foreign countries along with the domestic trade. It consists of 80 companies of a metal recycling business in Tokyo, Saitama, Kanagawa, Chiba, Gumma, Tochigi, Ibaraki, and Yamanashi. It exports steel scrap majorly to East Asian countries like South Korea, China, Taiwan, Vietnam, and Indonesia. Kanto Tetsugen Tender set the benchmark in Japanese scrap market in terms of prices and trends.

Key features of Kanto Tetsugen monthly scrap tender -
1. The grade of steel scrap is constituted by mainly H2 and H1 as well. H2 is steel scrap based on Japanese industrial standards."500mm in width or less, 1,200mm in length or less, thickness 3mm - 6mm, weight 1,000 kg or less".
2. Quality inspections are done twice, once by members and the second by the surveyor at the port.
3. In addition, radioactive checking is performed before loading the scrap on vessels.