Japan scrap price falls in March export tender

Wednesday's tender for Japanese H2 grade scrap for export in March depicted a confused market as the winning bid was lower on month but the quantity that traders sought was some 28,000 tonnes higher.

The tender organizer, the Kanto Tetsugen grouping of scrap dealers around Tokyo, said the winning bid for the H2 grade material being offered was Yen 43,200/tonne FAS ($282/t), which was lower by Yen 1,610/t from the top bid last month for current month shipments, and marked the first retreat in two months.

The quantity awarded was 15,000 tonnes, the organization said, the same as last month. The Kanto Tetsugen never reveals the name of the winner, but a Tokyo-based scrap market watcher believed it to be Nippon Steel Trading and that the destination is either Bangladesh or Vietnam.

Kanto Tetsugen chairman, Koji Minami, seemed satisfied with the result, telling Japanese media that although the top price was Yen 1,610/t lower, the strengthening of the yen against the dollar over the past month means the price is about the same.

Moreover, the price is some Yen 3,000-4,000/t higher than traders are currently paying for H2 delivered to Tokyo Bay for export and shipping to western Japan, sources note, with traders bidding Yen 38,500-39,000/t FAS for H2 at Tokyo Bay ports such as Kawasaki and Funabashi.

However, the increase is not seen as prompting Japanese mini-mills to raise their scrap buying prices. "Electric steelmakers do not need to purchase cargos at high prices because their crude steel production is not increasing," Minami observed. Over the past week, mini-mills in the Kanto region have stopped receiving scrap or limited the volume they will accept, with Tokyo Steel Manufacturing announcing it would decline all scrap deliveries on February 11 and limit acceptance of those on February 12 to the hours of 8am to 4pm, Mysteel Global notes.

On the other hand, in Wednesday's auction the number of bids soared to 18 from 15 trading companies, with the total tonnage sought jumping to 135,900 tonnes, higher by 25% or 27,300 tonnes compared with last month's tonnage. "As offers from overseas buyers have decreased due to the Lunar New Year holidays in Southeast Asia in late January, some buyers with a low amount of inventory need to purchase imported scrap," Minami said.

The Japanese traders expect inquiries to increase from importers in Vietnam, South Korea, Taiwan and elsewhere now that the new year celebrations have finished and steelmakers begin lifting production.

Written by Russ McCulloch, russ.mcculloch@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com