South Korean steelmaker POSCO has increased its bids for Japanese scrap once again, though this move has raised some questions amongst the market players since the international scrap market is moving down. The motivation for the higher bid price is reported to be the producer’s need to secure tonnages.
POSCO has shared bids for Japanese HS grade scrap at JPY 51,000/mt ($341/mt) CFR, JPY 3,000/mt higher than the previous levels announced last week. POSCO’s bids are now $18/mt higher than last week’s price.
In addition, POSCO has shared bids for Japanese shredded scrap at JPY 50,000/mt ($334/mt) CFR, JPY 3,000/mt or $18/mt higher than the previous level announced on October 10. The JPY 50,000/mt level indicates FOB-based prices for Japanese shredded scrap are at around JPY 47,000/mt or $314/mt, with freight between South Korea and Japan at around JPY 3,000/mt. However, this time the correlation between Tokyo Bay FAS prices and POSCO’s bid prices seems to have been broken.
Considering the gap between ex-Japan shredded and H2 scrap prices at around JPY 3,000-4,000/mt, this means indications for ex-Japan H2 prices for South Korea are at JPY 43,000-44,000/mt FOB or $287-294/mt FOB. The dollar-based H2 scrap price range on FOB basis is $18/mt higher than the levels calculated on October 10.
Earlier this week, Tokyo Bay FAS-based prices for H2 grade scrap were at JPY 41,500/mt ($277/mt), with FOB prices consequently at JPY 42,500/mt ($284/mt) for this grade. Both prices have increased by JPY 3,000/mt week on week.
Meanwhile, ex-Japan HS scrap prices were standing at JPY 46,500/mt ($311/mt) FAS and shindachi scrap quotations are at JPY 46,000/mt ($307/mt) FAS.
$1 = JPY 149.60