The Japanese scrap dealer cooperative Kanto Tetsugen's export tender price rose further in November on renewed demand from Vietnam.
A total of 20,000t of H2 scrap was awarded at ¥53,688/t ($338.18/t) free alongside ship (fas) today, up by ¥1,611/t from October. The result was equivalent to around ¥54,688/t fob, exceeding initial market expectations.
The cargo is expected to be shipped to Vietnam, translating to an estimated price of around $395/t cfr. Vietnamese mills have been reluctant to raise their bids for imported scrap on a slower-than-expected recovery in steel demand, with most maintaining target prices at $380-385/t cfr for H2. The higher tender result included a quality premium of around $5/t and also reflected the limited availability of cheaper alternatives in the seaborne market for large-volume buyers.
Many traders did not expect other Vietnamese mills or overseas buyers to follow at this price level, as many mills were already facing squeezed profit margins on the back of the current weak steel market.
Argus' daily assessment for Japanese H2 scrap was ¥52,000/t fob on 10 November. Tokyo Steel has kept domestic scrap prices unchanged since 22 October, with its H2 price at ¥51,000/t fas at its Tokyo Bay yard.
Market participants were watching to see whether Tokyo Steel would raise domestic prices in response to the higher tender result. But trade sources said domestic mills had been receiving sufficient scrap supplies recently as overseas demand was subdued.
