Shanghai, 9 October (Argus) — Japanese scrap dealer co-operative Kanto Tetsugen’s October export tender surged to a nine-month high, supported by steady demand from Bangladesh and the sharp depreciation of the yen.
A total of 20,000t of H2 scrap was awarded at ¥44,/t ($/t) fas, up by ¥2,/t from September. On an fob basis, this equates to ¥45,/t. The result far exceeded market expectations, largely due to the sharp fall in the yen against the dollar.
In dollar terms, the fob price increased by only $5/t from the previous month, as the yen weakened significantly — down by 3.7pc from the end of the previous week to ¥152.86:$1 today. The weaker currency could benefit export negotiations and partly offset the pressure from elevated freight costs.
The awarded cargo is expected to be headed to Bangladesh, with traders estimating a cfr level of $/t. But the tender result was about $15/t above the acceptable level for other Asian buyers, suggesting the broader seaborne market may take time to adjust, a trader said.
Benchmark mill Tokyo Steel increased its domestic scrap purchase prices by ¥1,/t at all plants except Takamatsu, after the sharp rise in the Kanto tender. Japanese traders are now likely to raise export offers in line with the more bullish market sentiment.
The Argus assessment for H2 scrap fob Japan was ¥42,/t on 8 October, with the September monthly average at ¥41,/t fob.
