Japan’s January Kanto H2 scrap tender price up on month

Japan's January Kanto H2 grade scrap tender saw one successful bid at a higher price on the month on both a Japanese yen and US dollar basis on Jan. 10, amid restocking activity ahead of the upcoming Lunar New Year holiday period.

The winning bid was awarded at Yen 44,810/mt ($284/mt) for a 15,000 mt cargo, up Yen 2,071/mt and up by $2/mt from last month's tender, according to Kanto Tetsugen's website as well as multiple market sources.

The Kanto tender price rose for the first month after two months of decline, with January's price level coming as a surprise to some market participants, considering muted demand and bearish pricing sentiments seen in past weeks.

"Many shippers were surprised at the very high awarded price today," said one Japan-based trader.

The 15,000 mt cargo was heard bound for Bangladesh for the second month in a row, with some Vietnamese scrap buyers noting that such price levels were "too high for [Vietnam]".

The tender price after conversion was heard to be within similar ranges to current Bangladesh seaborne scrap prices and indications, according to market sources.

"With HMS ½ 80:20 price ideas being around $350/mt CFR Bangladesh, and Kanto tender quality similar to 80:20 cargoes, considering freight from Tokyo to Chittagong of $55/mt, and the current exchange rate, it can be explained [why it went to a Bangladesh mill]," said a Japan-based trader.

In Vietnam, despite January's Kanto H2 grade scrap tender being awarded at a higher price, some market participants suggested that it might have limited impact on spot pricing sentiments considering demand and supply fundamentals.

"[H2 prices in Vietnam] will likely not change, as there are many sellers in the market, and not many buyers before the long holidays," said a Vietnam-based mill source.

Some traders also noted that the tender result's impact on offers and sentiment in Vietnam might be slightly cushioned, considering that "not all dock-side suppliers can prepare 10-15kt of H2 scrap; the price for H2 5kt CFR Vietnam is not so high."

H2 CFR Vietnam offers were heard at $310-320/mt CFR Vietnam on Jan. 9, with market participants looking to the inauguration of President-elect Donald Trump in the US for price clarity in the near term.

Domestic FAS collection prices for H2 grade were heard to have remained steady on the week at Yen 39,300/mt on Jan. 9.

Platts, part of S&P Global Commodity Insights, assessed the weekly H2 ferrous scrap price down by Yen 400/mt week over week at Yen 41,700/mt ($264/mt) FOB Tokyo Bay on Jan. 8.