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Kansai Tetsugen Sells No2 HMS For Export At Y33,520 FAS
Japan's Osaka-based Kansai Tetsugen federation of ferrous scrap dealers has sold 5,000 tons of No2 HMS to the successful bidder JFE Shoji Trade Corp at Y33,520/ton FAS Osaka Bay in the 29th joint export tender that the federation held March 15. There are provisions for the export cargo to be shiploaded for a period of March 21-April 20.

The sales price is higher by Y2,720 or 8.8% than what turned out in the federation's 28th joint export tender held February 3. It also indicates an increase of about Y500 on a March 15 benchmark of Y33,000/ton for No2 HMS ex steelworks in the Osaka area. Moreover, it marks an increase of Y1,038 on the average of winning bids in the March 10 export tender held by the Tokyo-based Kanto Tetsugen cooperative association of ferrous scrap dealers.

Kansai Tetsugen's export tender this time brought separate FAS bids from 13 trading companies. The first four bids hit a level of Y33,000/ton for total purchases of 20,000 tons, in which JFE Shoji Trade Corp made the highest bid of Y33,520/ton. The second highest bid stood at Y33,250/ton; the third highest at Y33,120/ton; and the fourth highest at Y33,000/ton.

Many of market sources are surprised at the results of the Kansai Tetsugen export tender because the winning bid would translate into a price level of Y34,500/ton FOB. By comparison, FOB prices under negotiation this week indicate a level of Y32,500-33,000/ton in new deals of No2 HMS exports from Japan to South Korea.

The way market observers see it, there is a high probability that the bids at higher ranks in the Kansai Tetsugen export tender were made on the assumption of shipments to China. For a positive factor, it is possible to hold down freight rates to a lower level by US$1-2 in shipments from the Osaka Bay area to China than from the Tokyo Bay area, experts point out.

Japan's trading companies, though, are quoted as saying that Chinese buyers in action for ferrous scrap purchases from Japan are limited in number. Therefore, it is understood that Japanese trading companies with business relations with those Chinese buyers have an advantage in negotiating ferrous scrap exports out of Japan to China.

Until now, new Japanese export deals of No2 HMS for China have been negotiated at a high price level. Having a major impact is a depreciation of the yen in the currency market, according to Japanese trading companies. The exchange rate stood at around US$1.00-Y84.10 March 15 when Kansai Tetsugen held its 29th joint export tender.

If the winning bid in the Kansai Tetsugen export tender is assessed at a price level of Y34,500/ton FOB for No2 HMS, the price level would translate into about US$410/ton at an exchange rate of US$1.00-Y84. Therefore, the price level of No2 HMS from Japan could still stand at an inexpensive one even considering the freight rate of less than US$30/ton for a shipment of 5,000 tons, compared with No1 HMS from the USA.

Meanwhile, Japan's ferrous scrap suppliers admit that it is difficult to expect South Korean steelmakers to increase bids at once for new purchases of Japanese ferrous scrap in the wake of the Kansai Tetsugen tender results. Some Korean steelmakers such as Dongkuk Steel Mill Co took moves anew March 15 for new purchases of Japanese material. But it is likely that the Japanese suppliers will put up strong resistance to negotiating new export deals of No2 HMS for South Korea at a price level below Y34,500/ton FOB, according to market sources. Besides, there are suggestions that the sellers may take a wait-and-see stance for a while after they have offered new price terms of shipments to South Korea.
last modified : Thu 22 Mar, 2012 [10:32]
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