The highest winning bid in Friday's monthly auction for Japanese H2 grade ferrous scrap for export from Tokyo Bay by the end of March was down Yen 3,020/mt ($28/mt) from last month's highest bid, the auction organizer said.
The first winning bid in the auction held by Kanto Tetsugen, a group of scrap distributors around Tokyo, was Yen 34,800/mt free alongside ship for 5,000 mt, the second winning bid was Yen 34,750/mt FAS for 5,000 mt and the third was Yen 34,700/mt FAS, also for 5,000 mt.
All three parcels were widely heard placed by Sangyo Shinko, a trader affiliated with Japan's largest integrated mill Nippon Steel & Sumitomo Metal Corp. But Sangyo Shinko officials in charge of the tender were unavailable for comment Friday.
The auction attracted 19 bids for a total of 129,000 mt of scrap, the average bid price was Yen 33,383/mt FAS.
A Tokyo-based scrap trader said most of market participants expected the winning bids to be decreased from last month. But the winning bids on Friday's auction were higher than the prices traders were paying to collect H2 material for export.
"Also the first winning bid is equivalent to around Yen 35,500-Yen 35,800/mt FOB, higher than the latest bids placed by South Korean mills, so the winner might be expecting Japanese export prices to be increased for the shipment by end-March," he said.
South Korea's leading EAF mill furnace Hyundai Steel placed its bid at Yen 34,500/mt FOB for H2 material on Tuesday and South Korea's Dongkuk Steel Mill placed its bid for H2 material at Yen 36,500/mt CFR Wednesday, equivalent to Yen 34,000/mt FOB,
Traders were currently paying around Yen 33,000-Yen 33,500/mt FAS to collect H2 material for export, down Yen 1,000/mt from Wednesday, trade sources said.
"Lower bid prices by South Korean mills have led Japanese domestic scrap prices lower, but scrap demand has been firm by mini-mills, supply-demand balance of scrap in Japan will be kept tight, we believe the result from the tender will support Japanese scrap prices to be bottomed out," he said.
Another scrap trader in Tokyo said the winner might use these tender parcels to fill its backlog orders which were booked at higher prices.
"Overseas customers have been taking strong stances on prices and decreasing their bids for Japanese scrap. We believe most of traders will wait and see the movement until other Asian countries return from their Lunar New Year holidays," he said.
S&P Global Platts assessed Japanese H2 grade ferrous scrap export prices at Yen 34,500-Yen 35,000/mt ($316-$321/mt) FOB Tokyo Bay Wednesday, down Yen 1,000/mt on the week.
