Results of a monthly auction for Japanese H2 grade ferrous scrap for export through Tokyo Bay have reflected firming export prices, although traders in Japan said the results were not indicative of any clear trends because of falling domestic prices in the country.
The highest-priced bid obtained in Wednesday's monthly auction for Japanese H2 grade ferrous scrap for export through Tokyo Bay by March 15 was that for 5,000 mt at Yen 16,150/mt ($137/mt) free alongside ship, the organizer said. This FAS price was an increase of Yen 330/mt over last month's highest winning bid and was equivalent to around Yen 17,150-17,350/mt FOB Tokyo Bay.
The auction held by the Kanto Tetsugen group of ferrous scrap dealers around Tokyo received 22 bids for a total of 142,000 mt of scrap, with bid prices averaging at Yen 15,201/mt FAS.
The second highest-priced and third highest-priced bids were for 10,000 mt and 5,000 mt at Yen 16,130/mt FAS and Yen 16,100/mt FAS respectively. Sangyo Shinko, a trader affiliated with Nippon Steel & Sumitomo Metal Corp., placed these three bids, according to sources who attended the auction.
Toyotsu Material, a raw materials trader in the Toyota Tsusho group, was awarded the remaining 10,000 mt of H2 scrap offered in the same tender at Yen 16,060/mt FAS, the same sources said.
A Kanto Tetsugen official said Wednesday the winning bids were higher than expected because Japanese traders are currently paying around Yen 15,000/mt FAS at Tokyo Bay area to collect H2 grade material to be exported.
A Tokyo-based trader did not think the awarded prices would affect the spot market for Japanese scrap. As H2 scrap was contracted last week to South Korea at Yen 16,000/mt FOB, the gap between the Kanto Tetsugen award prices and spot prices was wider than expected.
A Tokyo-based scrap trader noted that the overall average bid price for the 22 bids was similar to current prices traders were paying for H2 scrap at Tokyo Bay area. "We are curious how the winners managed to get their customers to sign contracts at the tendered prices which exceeded Yen 17,000/mt FOB, much higher than current export prices," he said.
South Korea's Dongkuk Iron & Steel purchased Japanese H2 scrap last week at Yen 16,000/mt FOB, Platts noted.
Another scrap trader in Tokyo said the trend of Japanese scrap prices had become unclear because while the winning bid prices were higher, Japanese mini-mills have been cutting their scrap buying procurement prices.
Japan's leading mini-mill Tokyo Steel Manufacturing has last cut its scrap buying prices by Yen 500/mt for all grades at all works effective January 8 arrivals. The procurement H2 buying price at its Utsunomiya works, north of Tokyo, was prevailing at Yen 15,500/mt.
The second trader noted domestic scrap deliveries to mini-mills in Japan have been smooth because scrap suppliers were in a hurry to deliver scrap amid the prospect of further price falls. "We believe mini-mills won't need to lift prices soon," he said.
