FLASH: Kanto Tetsugen scrap export price jumps $7

"The recent decline in ocean freight rates might have supported the rise, but the increase is still very big," a Tokyo-based scrap market source observed.

The auction attracted 15 bids from trading companies seeking a total of 125,900 tonnes, some 20,000 tonnes more than a month ago. The Kanto Tetsugen said the 20,000 tonnes of scrap its members awarded the winner (5,000 tonnes more than last month) is destined for either Vietnam or Bangladesh.

The dealer grouping never identifies the trader submitting the winning bid, but Mysteel Global understands it was Toyota Motor's scrap trading arm, Toyota Tsusho, for Bangladesh Steel Re-Rolling Mills (BSRM Steels).

The winning price is significantly higher than the price that traders were paying on January 7 for H2 scrap at Tokyo Bay wharves for shipment to western Japan or for export, namely Yen 43,000-44,000/t. The price had not changed since the start of the new year, but now almost certainly it will increase.

On Friday afternoon, just hours after the auction result was known, scrap market leader Tokyo Steel Manufacturing raised its buying prices for all grades of scrap delivered to its Utsunomiya works in the northern Kanto region by Yen 500-1,000/t, effective from Saturday morning deliveries. The mini-mill was trying to show dealers it was prepared to be a little more generous if they trucked the scrap to its works, rather than to the wharves for export.

From Saturday, Tokyo Steel will be paying Yen 44,000/t for H2 at Utsunomiya, up Yen 500/t, according to the company's price statement.

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

Edited by Alyssa Ren, rentingting@mysteel.com