Japanese H2 and US heavy melting scrap prices soared during the past week, with sentiment driven by rising scrap prices in international markets, trading sources in East Asia said Wednesday.
The move was supported by higher coking coal and iron ore prices.
S&P Global Platts assessed the H2 scrap export price at Yen 22,000-22,500/mt ($215-220/mt) FOB Tokyo Bay Wednesday, up Yen 1,500/mt from last week's assessment at Yen 20,500-21,000/mt FOB.
Hyundai Steel, South Korea's leading EAF mill, submitted its bid prices Wednesday at Yen 22,000/mt FOB for Japanese H2 and Yen 27,000/mt FOB for Shindachi, trading sources in Seoul said.
With scrap prices rising sharply in recent days, it was unclear how much supply the South Korean steel mill would be able to receive at its bid price -- an export tender attracted a much higher price for H2 scrap, trader said.
Tokyo-based Kanto Tetsugen scrap dealers' export tender attracted a highest bid for 10,000 mt of H2 scrap of Yen 23,360/mt FAS, Yen 3,940/mt higher than last month's highest bid. The cargoes are for shipment from Tokyo Bay by December 31.
The volume offered in the tender was lower than usual because the scrap organizer expected prices to rise.
"Considering Kanto's winning bid of Yen 23,360/mt FAS, Hyundai Steel's bid price seems a bit low," a Seoul-based trader said, adding the winning bid of Yen 23,360/mt FAS was equivalent to around Yen 24,160-24,360/mt FOB given a loading price of Yen 800-1,000/mt.
Several South Korean mini-mills contacted Japanese traders recently seeking to buy H2 material at around Yen 21,000/mt FOB. No deals took place because the traders expected Japanese scrap prices to rise.
The export of Japanese scrap to other markets was quiet. While many Japanese traders are withholding offers in anticipation of higher prices, some H2 offers were heard early this week at around $240-245/mt CFR Vietnam --equivalent to Yen 21,521-22,033/mt FOB.
Japanese traders are targeting exports of H2 scrap at Yen 23,000/mt FOB, up Yen 2,000/mt from a week ago and up Yen 1,000/mt from earlier this week.
Traders said the yen's appreciation against the dollar Wednesday could affect the country's scrap export business because most exports -- with the exception of those to South Korea -- are priced in dollars.
But the demand-supply situation may change and slow the rapid pace of scrap price rises, a Tokyo-based scrap trader said, adding some Japanese traders may hold back from offering material for a while to monitor the exchange rate.
In Japan, traders have been paying 20,000-20,500/mt FAS to collect H2 material to be exported from eastern Japan, up Yen 1,500/mt from a week ago.
Leading Japanese mini mill Tokyo Steel Manufacturing raised its scrap buying prices by Yen 1,000-1,500/mt for all grades at all works and a steel center, effective Tuesday, November 8, arrivals.
The company now pays Yen 21,000/mt for material truck delivered to its Utsunomiya works, north of Tokyo.
Many of other mini-mills in Japan also have lifted their scrap buying prices or offering higher spot prices to secure scrap.
Meanwhile, the bulk heavy melting scrap market in East Asia also saw prices rise. Late last week, three bulk mixed HMS cargoes, around 30,000 mt each and for January shipment, were heard ordered from a West Coast supplier to China at $261/mt CFR shredded basis, regional trading sources said.
This week, a Thai mill was said to have booked a mixed HMS cargo for December shipment, comprising 20,000 of shredded at around $280/mt CFR and 6,000 mt of HMS, $275/mt CFR.
The $275/mt price was generally regarded as too high for other regional mills to accept. Last week, another Thai mill was heard to have secured a small cargo at $250/mt CFR HMS basis.
Steel mills could accept a buying price of $260-265/mt CFR because steel prices have jumped, a Chinese trader said.
In Taiwan, a small volume of containerized West Coast US scrap was booked at $235/mt CFR HMS basis earlier this week.
Suppliers have reduced scrap offers to the market, a Taipei trader said, adding the main driver for scrap prices was from the blast furnace mills.
Containerized scrap is normally estimated at $20/mt lower than bulk HMS.
US suppliers have been offering bulk scrap at $285/mt CFR HMS I basis, a Korean trader said. These suppliers are unwilling to lower their prices and preferred to delay selling until prices reached these levels, he said.
An Australian scrap supplier said he received bids for bulk HMS last week at $255/mt CFR but had no material to sell this week.
There was "disbelief" in the market at current scrap prices, a trader said. Vietnamese buyers were missing the chance to book material in the fast rising market, he said, adding that based on the results of Kanto's tender, bulk HMS should be priced above $260/mt CFR HMS basis.
Platts raised its East Asian bulk HMS I/II 80:20 scrap assessment to $255-265/mt CFR, from last week's $230-235/mt CFR.
The implied mid-point of $260/mt CFR was up $27.50/mt week on week.
