Japan Ferrous Scrap Price to Hit Bottom

Japanese ferrous scrap market price shows sign to hit bottom when the export price hit bottom. Local electric furnace steel makers pay 27,000-28,500 yen per tonne for H2 grade scrap. The makers hope low level scrap cost while a trading firm source said the higher scrap price is good for market price of steel products.

Scrap export price is around FOB 28,000 yen per tonne for H2 grade, which is around 500 yen higher than late October. South Korean buyers keep securing Japanese scrap and Japanese exporters talk with buyers in China and Taiwan recently while the buyers in China and Taiwan didn’t show appetite for Japanese scrap before. US scrap exporters increase the offer to more than US$ 400 per tonne, which is US$ 20-30 higher than recent bottom. With the positive export market, Japanese scrap interests see the domestic price hit bottom after the downward trend since late September.

Electric furnace steel makers around Tokyo pay 27,000-28,500 yen per tonne for H2 grade scrap as last week. Most of the makers keep the purchase price since late October. However, some scrap shippers try to increase the FAS shipping price along with the higher export price. The FAS price approaches to local makers’ purchase price recently.

Electric furnace steel makers around Osaka pay 27,500-28,500 yen per tonne for H2 grade. The price was expected to decrease to 25,000-26,000 yen level when domestic integrated steel makers reduce the purchase volume. However, the dealers now expect the price hits bottom due to tight domestic supply with lower generation and higher offshore market.

Some makers around Osaka purchased some grade of scrap at spot basis last week. A trading firm source said the makers try to secure margin to minimize the scrap cost but the higher scrap cost also encourages the steel buyers to submit steel order with higher price expectation.