The monthly export tender of Japanese scrap dealer co-operative Kanto Tetsugen extended its gains in May, driven by a favorable currency exchange rate.
The May tender was concluded at ¥52,590/tonne fas for 20,000 tonnes of H2 scrap on May 9, an increase of ¥1,503/tonne from April.
This brought the fob price to an equivalent of ¥53,590/tonne or $344.60/tonne. Two cargoes were settled on May 9, one of 15,000 tonnes and another of 5,000 tonnes, both at the same price. While some market participants anticipated the first cargo would go to Bangladesh, as in recent months, others suggested both were destined for Vietnam, where the domestic steel market has shown signs of recovery since mid-April.
The renewed increase in the export tender was mainly driven by the depreciation of the Japanese yen. Despite the significant increase in the tender result, the equivalent price in US dollars only rose by around $1/tonne compared with the previous month, as the yen weakened to ¥155.70 to the dollar from ¥151.80 on April 10.
The Argus H2 fob Japan assessment was ¥50,800/tonne on May 8, while the April monthly average was ¥50,757/tonne fob Japan. Tokyo Steel followed the Kanto tender by raising the collection price at its Utsunomiya plant by ¥1,000/tonne and maintained prices at other plants.
The increase in the tender result and domestic prices in the Kanto region will raise suppliers' target levels for export business. However, overseas buyers may require more time to absorb the gain and await further rises in steel sales prices, according to a market participant.
