The highest priced bid in Thursday's monthly auction for Japanese H2 grade ferrous scrap for export from Tokyo Bay by December 15 was Yen 19,400/mt ($187/mt) free alongside ship, a drop of Yen 660/mt on last month's highest bid, the organizer said.
The monthly auction held by the Kanto Tetsugen group of scrap dealers around Tokyo received a total of 19 bids seeking 215,000 mt of scrap, the organizer said. The average bid price was Yen 18,569/mt FAS.
The winning bid awarded was for 10,000 mt. The second highest bid was Yen 19,060/mt FAS for 15,000 mt.
Both bids were placed by Sangyo Shinko, a trader affiliated with Nippon Steel & Sumitomo Metal Corp., trading sources said.
Officials at Sangyo Shinko weren't immediately available for comment about the results on Thursday.
A Kanto Tetsugen official said the winning bid was higher than expected because Japanese traders are currently paying dealers about Yen 18,000/mt FAS at Tokyo Bay for H2 material for export.
A Tokyo-based scrap trader believed that the winning parcels are destined for Vietnam.
"These winning bid prices seem close to the current offer prices in Vietnam. Japanese traders have been holding their target prices for H2 material for Vietnam at $220/mt CFR in recent weeks," he said.
The trader calculated that the average price of the two parcels awarded in the tender comes to Yen 19,196/mt FAS, equivalent to $220-223/mt CFR Vietnam.
South Korea is the largest buyer of Japanese scrap but current export prices to that market are lower so the cargoes don't seem to be sailing there, the trader said.
Earlier this week, South Korean mini-mill Dongkuk Steel Mill booked H2 scrap at Yen 18,700/mt FOB Japan.
Another scrap trader in Tokyo said that the result of the tender may indicate that Japanese scrap prices are bottoming out.
"We expect the Japanese integrated mills to consume more scrap later this year so Japanese scrap prices will start increasing soon should the supply-demand balance tighten as expected," he said.
Japan's leading mini-mill, Tokyo Steel Manufacturing, has not altered its scrap buying prices since September 6 arrivals. The company is currently paying Yen 20,000/mt for H2 material at its Utsunomiya works, north of Tokyo.
S&P Global Platts had assessed its weekly H2 scrap price at Yen 18,700/mt FOB Tokyo Bay on October 12, as reported.
