Japan Ferrous Scrap Price to Drop

Japanese ferrous scrap market would turn into decrease for the first time in 2 months due to slower demand at home and abroad. The price is likely to move downward to stay lower level when the domestic demand could keep very low under major production cut by integrated steel makers and electric furnace steel makers while the export demand keeps certain volume for China and other East Asian countries.

Offshore scrap market decreases in Turkey and USA along with import price by South Korea and Taiwan. The lower offshore market would impact on Japanese market, especially around Tokyo, where is the major supply area for export.

Electric furnace steel makers around Tokyo 0pay 20,000-22,000 yen per tonne for H2 grade scrap while export price is FOB 22,000-23,000 yen for H2, which is 3,000 yen lower than the beginning of the month. Most of the local steel makers keep the scrap purchase price but the price could decrease when the export transaction decreases due to almost no price advantage for Japanese scrap compared with decreasing US market.

The scrap price could decrease, especially for high grade scrap around Osaka due to major production cut by integrated steels and special steel makers while the scrap supply is very low. Local electric furnace steel makers pay 19,500-22,000 yen per tonne for H2 grade. However, with lower consumption by the makers, the market interests expect the price could decrease by 500-1,000 yen in short term.