Scrap prices at Japan's monthly Kanto tender jump to 3-month high on increased bids

Around 15,000 t of scrap was awarded and the average price for H2 scrap stood at around JPY 51,040/t ($357/t) FAS at Japan's Kanto scrap tender, SteelMint learnt from sources.

Prices rose JPY 8,979/t ($62/t) from JPY 42,062/t ($294/t) in August. Notably, prices have moved up to a three-month high on increased bid prices, as per SteelMint data.

Sources revealed that the entire quantity was booked by a Bangladesh-based major mill.

The FOB prices for exports of Japanese material are higher by around $9-10/t compared to FAS prices. Notably, the Kanto tender serves as a benchmark for the Japanese scrap export market.

Major buyers of Japanese scrap such as Vietnam, Bangladesh and South Korea may resume active bookings owing to the non-stop increase in Japanese scrap prices. The coming winter season is likely to support mills to improve their rebar sales.

Additionally, Japanese suppliers are likely to keep their offer prices higher as the sharp devaluation of the Japanese currency may support the export market, SteelMint notes.

The Japanese Yen is trading at 142.1 in the currency exchange market, slightly up against 144.9 recorded this week.

Buyers show mixed trend

• Bangladesh active in Kanto tender: Bangladesh remained a major buyer for the third consecutive month in Japan's Kanto scrap export tender as buyers are showing consistent interest in buying bulk material from Japan since July. A total of 15,000 t of H2 material has been booked at JPY 51,040/t ($357/t) FAS basis.
  
  
• Vietnam fails to match bid levels: In today's tender result, Vietnamese buyers' bid prices failed to meet the expectations of suppliers, considering the sharp hike in bid prices. However, a couple of bulk cargoes were booked for Japanese scrap last week. Indicative offers for Japanese bulk H2 scrap were heard at $420-430/t CFR Vietnam, however, workable levels remained at $415/t CFR.
  
  
• South Korean mills postpone bids: South Korea's major mills and prominent Japanese scrap buyers, Hyundai Steel and POSCO, have postponed bids for Japense scrap this week. Meanwhile, mills have increased domestic scrap procurement prices earlier in the week by KRW 20,000/t ($15/t), as per a Steel Daily report. POSCO raised prices for the Gwangyang and Pohang plants, while SeAH lifted prices for Besteel and Changwon.
  
  

On the other hand, multiple fires broke out at POSCO's steel plant in Pohang, impacting operations in two factories. The incident happened soon after the landfall of typhoon Hinnamnore. The company declared that the restoration work against the damage caused by the typhoon is under progress, and the operations at the three blast furnaces at Pohang works are expected to resume from 10 September.

• Japan's Tokyo Steel lifts scrap procurement prices by $21/t: Japan's major EAF steelmaker, Tokyo Steel, has increased scrap purchase prices this week. The company raised bids for H2 scrap by JPY 3,000/t ($21/t) for four of its plants, effective 10 September. After the adjustment, bid prices for H2 scrap were at JPY 51,000/t ($359/t) delivered to the Tahara and Utsunomiya plants.
  
  

Outlook: Market participants believe that Japanese scrap export offers may come down in the near term, as Vietnam and Taiwan are not really active in booking Japanese material. On the other hand, Bangladesh-based mills only book cargoes from tender; other mills prefer the USA or material from other origins.