The Japanese scrap dealer cooperative Kanto Tetsugen's January export tender settled today at a price above market expectations, supported by a weakening Japanese yen and renewed restocking demand from Bangladesh.
A total of 20,000t of H2 scrap was awarded at ¥46,771/t free alongside ship (fas) today, up ¥1,083/t from December. On an fob basis, the tender price is equivalent to ¥47,771/t ($303.84/t).
Prior to the tender, most market participants had expected the result to remain broadly in line with the previous month, as tradable seaborne prices had been largely stable over the past month on limited buying interest and firm offers. Earlier this week, Vietnamese mills' bids for H2 scrap were reported at $320-323/t cfr.
The higher-than-expected January tender result surprised the market, with the cargo scheduled for shipment to Bangladesh in February. Bangladeshi mills had been inactive in the tender over the past two months because of a sluggish steel market and political uncertainty ahead of the national election. "This price is above the current market level, but it reflects buyers' expectations of further price increases in the coming month," a Japanese trader said.
Deep-sea bulk scrap from the US west coast is an important supply source for Bangladeshi mills. But the recent rally in the Turkish market has encouraged many west coast sellers to divert tonnages to Turkey. In addition, sellers are anticipating a $30/gt increase in US domestic scrap prices in January, which would make it increasingly difficult for Bangladeshi mills to secure deep-sea bulk cargoes at competitive prices. Consequently, mills may pay some premium for Japanese scrap to secure tonnages.
Japanese traders said they would closely monitor whether buyers in Vietnam and Taiwan follow the upward trend and raise their bid levels.
The Argus daily assessment for H2 scrap fob Japan stood at ¥44,200/t on 8 January, compared with a December monthly average of ¥44,214/t fob.
