Japanese scrap prices rose during the past week on tight scrap export supply and an anticipated uptick in demand from Vietnam, trading sources in Japan said Wednesday.
The import market for bulk ferrous heavy melting scrap also climbed in East Asia following increases in other scrap markets, including Turkey, and higher steel and iron ore prices.
South Korean mills raised their bid prices for Japanese scrap, and deals were concluded at higher prices compared to a week ago.
Platts assessed its weekly H2 scrap price at Yen 17,000/mt ($151/mt) FOB Tokyo Bay Wednesday, up Yen 350/mt from the mid-point of last week's price assessment of Yen 16,500-16,800/mt FOB.
On March 3, South Korea's Hyundai Steel booked Japanese H2 material at Yen 17,000/mt FOB, Yen 19,000/mt FOB for HS grade as well as shredded grade, and Yen 19,500/mt FOB for Shindachi grade.
The Korean steel mill also offered an extra premium of Yen 500/mt for bookings exceeding 6,000 mt, sources in Tokyo and Seoul confirmed Thursday. These orders were for cargoes for shipment by April 20.
Other Korean mills including Dongkuk Steel Mill were also negotiating with Japanese traders early this week to buy H2 scrap at Yen 17,000/mt FOB.
Vietnam's March 7 decision to impose provisional duties on billet will drive import demand for scrap. Vietnamese mills will boost their melting capacity to produce billet in the country instead of importing billet.
"Japanese traders have already lifted their target scrap export prices," a Japanese trader said.
Japanese traders are currently aiming to sell Japanese H2 at the minimum of Yen 18,000/mt FOB, up Yen 500/mt from last week. "Some traders are more aggressive and aiming to offer around Yen 18,500/mt FOB," another scrap trader in Tokyo said.
Meanwhile, Kanto Tetsugen's latest export tender which opened Wednesday for H2 scrap from Tokyo Bay by May 15 reflected higher Japanese scrap prices.
The tender attracted the highest bid of Yen 18,600/mt free alongside ship (FAS) for 15,000 mt, the organizer said. This was Yen 1,770/mt higher than last month's highest winning bid. The next highest bid was Yen 18,500/mt, also for 15,000 mt.
Itochu Metals Corp, Itochu group's specialized metal trader, made the highest bid and JFE Shoji, JFE Steel group trader, the next highest, according to sources who attended the auction. Officials from Itochu Metals and JFE Shoji were unavailable for comment Wednesday.
The Kanto Tetsugen group of scrap dealers around Tokyo received 18 bids for a total of 171,000 mt of scrap, at an average Yen 17,756/mt FAS. "The prices in the winning bids were higher than we expected," a Kanto Tetsugen official said Wednesday.
Some Japanese trading sources said the two cargoes are destined for Vietnam and would likely be sold at around $198/mt CFR Vietnam.
In Japan, traders are actively collecting scrap, paying around Yen 16,500/mt FAS for H2 scrap for export, up Yen 500/mt from last week.
Tokyo Steel Manufacturing, Japan's leading mini-mill, raised its scrap buying prices effective from March 8 arrivals by Yen 500/mt at its Okayama works in west Japan as well as its Takamatsu Steel Center on Shikoku Island.
The company's H2 buying price at Okayama was now risen to Yen 15,000/mt.
Tokyo Steel implemented the price hikes to narrow the price gap with that of Tokyo Steel's other mini-mills elsewhere. Tokyo Steel was currently paying Yen 16,500/mt for H2 material trucked to its Utsunomiya works, north of Tokyo.
Meanwhile, the import market for bulk ferrous heavy melting scrap strengthened during the week on improved prices in other markets such as Turkey and increased prices for iron ore and steel, regional trading sources said Wednesday.
Offers were limited because scrap suppliers are able to supply to better paying markets elsewhere or are withholding offers in anticipation of further price rises.
A Thai mill late last week secured at least two bulk cargoes from Australia for April/May shipment comprising shredded and bulk HMS I/II 80:20 scrap at $205/mt CFR 80:20 basis, a Thai trader said.
Trading sources in the region said this price was in line with the market as Turkish scrap prices had risen as well as steel prices in China.
Suppliers are holding back cargoes and seeking to offer bulk HMS 80:20 scrap at the minimum of $200/mt CFR for May/June shipments, a Malaysian mill manager said. "Suddenly everyone wants scrap," he said.
The bullish sentiment was due to the sharp increase in spot iron ore and billet prices in China. He was looking for material at $190/mt CFR but admitted he did not expect to find material at this price.
A Taiwanese trader said he was not receiving any offers from Japan or the US for scrap as it was a "crazy market," adding that Chinese billet prices rose sharply over the weekend.
Prevailing offers of Chinese billet were now at $320/mt CFR Taiwan, he observed. He noted that Japanese H2 prices were close to $200/mt CFR to Vietnam.
"I believe Southeast Asian bulk HMS prices are reaching $195/mt CFR in negotiations," a trader in Australia said. Deals for bulk HMS 80:20 scrap from Australia concluded at $185/mt CFR in second half February to Southeast Asia including Thailand.
Vietnamese trading sources said they saw no offers for bulk HMS during the past week. A Vietnamese trader said he had not heard of any bulk HMS offers but he expected to see offers out of Japan Thursday since the Kanto tender was completed Wednesday.
Suppliers want to hold onto their cargoes and observe the market trends, a Hanoi trader said. While Vietnamese buyers are asking for offers, they are also concerned the current uptick in scrap prices is not sustainable, he said.
His view was that the scrap market would be stable at the very least and the new price level for Japanese H2 scrap was $200/mt CFR Vietnam. Last week, he had an offer in hand for bulk 80:20 from Australia at $195/mt CFR Vietnam but he was not able to find a buyer and believed the cargo was sold elsewhere.
Platts assessed East Asian bulk HMS I/II 80:20 scrap on Wednesday, March 9, at $195-205/mt CFR, up from the previous week's $179-$185/mt CFR. The implied midpoint of $200/mt is $18 higher on the week.
