Posted on 11 May 2023
Japan's largest independent mini-mill, Tokyo Steel Manufacturing, has slashed its buying prices for all grades of ferrous scrap at all works and scrap holding centers by Yen 2,000-3,000/tonne ($15-22/t) effective from Thursday deliveries in response to the continuing slide in scrap export prices.
As a result, Tokyo Steel is paying collectors and dealers Yen 2,500/tonne less for most scrap grades at its Tahara works in Aichi, its Okayama plant in western Japan, its Takamatsu steel center on Shikoku and at its Kyushu works in Kitakyushu. The exceptions are the larger Yen 3,000/t cut it has made for turnings grade material delivered to Tahara, and the Yen 2,000/t reduction for all scrap bound for its Utsunomiya works north of Tokyo and its Nagoya scrap center.
Tokyo Steel announced the cuts via its website late Wednesday just hours after the Kanto Tetsugen grouping of Tokyo-based ferrous scrap dealers had opened the results of this month's auction for H2 grade scrap for export where the top bid was lower again on month, this time by Yen 4,330/t.
The winning bid of Yen 46,226/t for 15,000 tonnes of the H2 that the dealers were offering was also the lowest since August last year and lower by Yen 1,000-2,000/t from the FAS price at Tokyo Bay ports that traders are paying for H2 for export and for delivery to mills in western Japan. The runner-up bid, awarded 5,500 tonnes, was lodged at Yen 46,030/t.
In last month's tender, traders had submitted 14 bids – fewer than the 17 in March's tender – and had sought a total of 71,500 tonnes, as Mysteel Global reported. On Wednesday, only 13 bids were received for a smaller total of 66,700 tonnes, the Kanto Tetsugen said.
Significantly, in the past when announcing its results details, the organizer would also announce the average price of all bids received, but on Wednesday, the group's management decided not to reveal the average.
"We will refrain from making public the average bid price from now on because it might have an impact on the market price," Kanto Tetsugen chairman Koji Minami is quoted as saying. He argued that the result did not surprise members, suggesting that with Japanese H2 export prices being around $370/t CFR (to Vietnam), at prevailing exchange rates of around Yen 135=$1, the FAS price would be around Yen 42,000-44,000/t. "In spite of this, the winning bids remained in the Yen 46,000/t range," he said.
Nevertheless, all signs are that domestic and export prices will continue heading down, which is why Tokyo Steel quickly clipped its buying prices after seeing the Kanto Tetsugen result, Mysteel Global notes.
New data from the Japan Ferrous Raw Materials Association show that during the first two weeks of this month, domestic transaction prices of locally available H2 scrap averaged Yen 45,415/t delivered to steelworks in the Kanto region, in Chubu in central Japan and in the Kansai region around Osaka, down Yen 1,222/t from the last week of April and falling for a seventh straight week.
Source:Mysteel Global