Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Average winning bids at Japan’s monthly Kanto Tetsugen export tender were at JPY27,216/mt ($257.83/mt) fas Tokyo bay or JPY28,216/mt ($268/mt) fob Japan, the highest in 2020 and up by JPY3,642/mt ($34.5/mt) from the prior month. The tender results were announced on Wednesday and sold 22,000mt of ferrous scrap for deliveries scheduled in late September. 

The highest every bid level of JPY27,714/mt fas Japan was recorded in Aug 2019.  


The average bids were higher by JPY2,000-2,500/mt than the current market levels. The results are likely to support Japanese traders to raise ferrous scrap export prices in the coming days.


The first winning bid was for 15,000mt of #2 HMS by JFE Steel at JPY27,285/mt fas Japan. This shipment will be delivered to Bangladesh, states the trading company. 

The second winning bid by ‘Itochu steel’ company was at JPY27,070/mt fas Japan for 5,000mt to be shipped to Vietnam. The remaining 2,000mt was sold to JFE steel at JPY27,060/mt fas Tokyo bay. In the tender, 15 companies participated with 25 bids placed for a total volume of 166,000mt.


Bangladesh, a major destination 

Bangladesh has emerged as a major Japanese scrap buyer in recent weeks. Traditional export destinations for Japanese traders like Taiwan, Vietnam, and South Korea have lowered their purchases. South Korean mills opted for Russian small bulk cargoes, priced lower than Japan-origin material, while Taiwanese and Vietnamese mills failed to sellers expectations.  


Bangladesh has recently bought around three small bulk vessels from Japan with #2 HMS scrap priced in the range $295-300/mt cfr Chattaogram. 


The tender prices are likely to set a precedent for Japan and Southeast Asian markets. Many participants had already predicted Kanto’s average bids to increase in August following a sudden rise in the global prices on supply shortage.


Declined domestic steel consumption in Japan 

Domestic steel consumption in Japan dropped over the first three months of FY2020 (April 2020-March 2021) amid weak end-user demand from the construction and automotive sectors. The economy and downstream demand have been hit by the pandemic. 

The auto sector is expected unlikely to pick up before March 2021. Sales in overseas markets have decreased and the outlook for the upcoming quarter is negative. According to the Japan Iron and Steel Federation (JISF), in April-June, the total consumption of Japanese steel products by domestic and overseas customers decreased by 24.9pc to 11.96mn mt from the prior year. 



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