The winning bid in Tuesday's monthly auction for Japanese H2 grade ferrous scrap for export from Tokyo Bay by the end of January was up Yen 4,126/mt ($36/mt) from last month's highest bid, the auction organizer said.
The winning bid in the auction held by the Kanto Tetsugen grouping of scrap dealers around Tokyo was Yen 36,126/mt free alongside ship for 15,000 mt. The auction attracted 19 bids for a total of 140,600 mt of scrap. The average bid price was Yen 34,577/mt FAS.
A Tokyo-based scrap trader said that he expected the winning bid to be much higher compared with last month because overall scrap prices have gone up.
"But the winning bid was much higher than we expected, we believe the winner expects Japanese scrap prices to rise far further by end-January," he said.
Another scrap trader in Tokyo said the winning bid was equivalent to around Yen 37,000/mt FOB, nearly Yen 2,000/mt higher from the current export level.
"Average bid price is equivalent to around Yen 35,400/mt FOB. This is also higher than the current export level. We are sure many are expecting Japanese scrap prices to go higher," he said.
The latest H2 scrap export contract was by Hyundai Steel, South Korea's leading electric arc furnace mill, at Yen 35,000/mt FOB for H2 material on December 8, up Yen 1,000/mt from its previous booking on November 28.
The second trader also said that scrap distributors would slow down their deliveries to mini-mills or yards for export, waiting for scrap prices to rise further.
"Domestic mini-mills and traders will have to continue to lift prices to secure sufficient volume of scrap, overall domestic scrap prices will also go higher very soon," he said.
On Tuesday, Tokyo Steel Manufacturing, Japan's leading mini-mill, decided to lift its scrap buying prices by Yen 500/mt for all works and a steel center effective for Wednesday onward arrivals. H2 buying price at its Utsunomiya works, north of Tokyo, rose to Yen 36,000/mt. The total increase by the company in the last one month has reached Yen 3,000/mt.
Japanese traders are currently paying around Yen 34,000/mt FAS to collect H2 material to be exported from eastern Japan, up Yen 1,000/mt from a week ago.
