Inquiries from South Korea are on the increase for new purchases of ferrous scrap from Japan, a situation where there are strong signs of a future advance in Japan's ferrous scrap export market for new deals. South Korean buyers such as Hyundai Steel Co, Korea Iron & Steel Co, Yamato Korea Steel Corporation and POSCO Processing & Service Co made inquiries August 17th 2012 one after another.
As a result, negotiations are expected to perk up after a long time on new deals of ferrous scrap exports from Japan to South Korea. New prices under negotiation indicate an increase of JPY 1,000 to JPY 1,500 per tonne so far on what was negotiated in the first week of August 2012.
In the week that started August 6th 2012, most of Japan's ferrous scrap suppliers held back on negotiating new export deals of shipments to South Korea, given a future rise in the export market for Japanese ferrous scrap. South Korean steelmakers' price ideas were JPY 27,500 to JPY 28,000 per tonne FOB for No2 HMS as of August 9th 2012 when the Tokyo based Kanto Tetsugen cooperative association of ferrous scrap dealers held its latest export tender. The Japanese suppliers entered summer holidays last week while having held back on selling No 2 HMS in a price range of JPY 27,500 to JPY 28,000 per tonne FOB on the assumption that Japan's ferrous scrap export market would further advance after the Kanto Tetsugen export tender.
In Japan, many of domestic ferrous scrap dealers took bon holidays until August 16th 2012 and resumed operations from August 17th 2012. In this connection, pricing leader Tokyo Steel Mfg Co increased what the company pays for locally available ferrous scrap by JPY 1,500 to JPY 2,000 per tonne from August 17th 2012 as if to meet the resumed operations of ferrous scrap dealers.
Meanwhile, South Korean steelmakers are believed to have ended in few new purchases of Japanese ferrous scrap in the past two weeks, behind which lay two factors. In the first place, there was enhanced speculation about a future rise in Japan's ferrous scrap export market after the Kanto Tetsugen export tender. In the next place, negotiations were suspended last week on new Japano Korean ferrous scrap deals because of bon holidays across Japan.
For their part, the Japanese ferrous scrap suppliers have further increased offer prices of new exports to South Korea since Tokyo Steel increased its purchase prices of local ferrous scrap for the first time in four and a half months. As of August 17th 2012, most of the new offer prices were JPY 29,500 to JPY 30,000 per tonne FOB for No 2 HMS.
But there is little possibility that the South Korean steelmakers will firm up new purchases of No 2 HMS at once at prices to meet the ones on offer, admit some Japanese suppliers. As of an August 17th 2012 afternoon, there was no firm bid from Hyundai Steel Co. But there is information on the company's price ideas of JPY 28,500 per tonne FOB for No 2 HMS and JPY 32,000 per tonne FOB for Shindachi, a high grade of Japanese ferrous scrap.
Hyundai Steel's reported price ideas are higher by JPY 1,000 per tonne than the company's negotiated prices before bon holidays across Japan. But it is uncertain whether the Japanese suppliers will respond and negotiate new deals with the South Korean buyer. An upward phase of Japan's domestic ferrous scrap market has just started for the first time in four months, which still makes it difficult to ascertain how far the domestic market will ascend. Therefore, it is understood that the suppliers as a whole are poised to make sure of how market conditions will develop while standing pat on bullish offer prices in new export deals.
Source - TEX Report Limited
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