Posted on 10 Dec 2021
The export scrap tender issued by Japanese scrap dealers' co-operative Kanto Tetsugen failed for the second consecutive month in December, caused by a widening price gap between the domestic and seaborne market.
This was the first time that the Kanto tender has failed for two straight months, although it was within many market participants' expectations as sentiment in the seaborne market was too bearish and the target price was far below the workable price in Japan's domestic market. The co-operative did not disclose the highest bid prices this time, market participants said, which was also unusual. The highest bid in last month's tender was ¥51,200/t ($451/t). "I guess all bids are below ¥50,000/t in this tender", a Japanese trader said.
Japanese export activity has remained muted in the past several weeks as the fall in the overseas market outpaced the price correction in the Japanese domestic market. The Argus H2 fob Japan assessment fell by ¥4,700/t to ¥49,800/t during 22 October-3 December, with buyers' latest target price around ¥47,500/t fob. But the H2 collection price of Kanto steel mills held firm at ¥54,000-55,000/t. The ¥7,000/t gap was wider than the typical spread, with this deterring exports, participants said.
The unsuccessful tender result will lead to more bearish sentiment in the seaborne market, some Japanese traders said. "Maybe this time it will trigger another round of price correction in the domestic market", according to a Japanese trader.
Tokyo Steel announced today a cut in the collection price at its Utsunomiya and Tahara plants after the tender result emerged. Prices will be reduced by ¥500/t for most grades at the two plants, while the Shindachi price at its Tahara plant will be cut by ¥2,500/t.
Source:Argus
