Japan scrap prices dip in export auction but tonnage surges
The price of the winning bid was Yen 51,510/tonne ($328/t) FAS, lower by Yen 1,080/t from last month's top bid, Mysteel Global notes, with the winner – believed to be JFE Steel's trading arm, JFE Shoji – awarded 10,000 tonnes. The runner-up bid, apparently placed by Toyota Tsusho Material, was for Yen 51,267/t FAS for 15,000 tonnes.
Despite the dip in price, both bids were still above the Yen 50,000/t threshold – marking the tenth consecutive month at this level – while the combined tonnage awarded of 25,000 tonnes was the highest since July 2022 and above the Kanto Tetsugen's acceptable range of 5,000-20,000 tonnes.
"The Kanto Tetsugen might not have wanted to award a volume as large as 25,000 tonnes because the prices were lower on month," a Tokyo-based scrap market source observed. "But on the other hand, the top bid was just for 10,000 tonnes – which the dealers might have thought too small – so they had to accept the runner-up bid seeking 15,000 tonnes," Mysteel Global was told. The first cargo is bound for Vietnam and the second to Bangladesh, the tender organizer said.
The Kanto Tetsugen's chairman, Koji Minami, said the winning price was about what he had expected and that he was not surprised at the reduction. "Crude steel production is decreasing both in Japan and abroad, and steelmakers overseas are not hurrying to buy Japanese scrap due to summer production cuts," he told Japanese media.
The prices the Japanese traders are currently paying for H2 scrap delivered to Tokyo Bay for export and for shipping elsewhere in Japan have indeed softened of late, with the average price as of June 11 being Yen 51,000/t FAS, lower by about Yen 500/t on week, according to Japanese sources.
"The price gap between the Tokyo Bay (trader) price and what the mini-mills are paying has widened a little (but) finished steel demand is weak and scrap demand may become slower," the Tokyo industry source remarked, suggesting that this might be the reason why the dealers accepted the lower-priced bids but for a larger quantity.
Kanto Tetsugen Chairman Minami confirmed this view, saying the majority of dealers at Thursday's auction had voted to accept the higher tonnage because domestic mini-mills usually idle facilities for annual maintenance in July and August when electricity prices are highest and so halt or severely limit the volume of scrap they buy.
"The fear among members was that there would be no sales channels in July," Minami is quoted as saying, so the dealers decided to supply the tonnage the bidders had sought and make some sales before the summer slowdown.
Written by Russ McCulloch, russ.mcculloch@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com
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