Japanese scrap dealer cooperative Kanto Tetsugen's export tender price rose sharply in October, supported by strong buying interest from Bangladesh.
A total of 20,000t of H2 scrap was awarded at ¥52,077/t ($329.15/t) free alongside ship (fas) today, up by ¥3,964/t from September. The result was equivalent to ¥53,077/t fob, significantly exceeding initial market expectations.
Most market participants had expected the tender to settle at around ¥50,000/t fas, given that domestic scrap prices in the Kanto region stood at ¥49,000/t. Although Tokyo Steel had raised domestic collection prices three times since 19 September, overseas buyers had increased bids only gradually because of a slow recovery in finished steel sales.
The October tender cargo is expected to be shipped to Bangladesh, as in previous months, at an estimated price of around $405/t cfr. "The trader that won the tender might be betting on lower freight rates at the time of shipment; otherwise, the cfr price would not be sufficient given current freight costs," a Japanese trader said.
Buyers in other markets indicated that the tender price was too high for them to follow. They preferred to wait for more competitive offers from other scrap suppliers or to consider billet instead.
The Argus daily assessment for H2 scrap fob Japan was ¥50,300/t on 8 October.
