Japan Brass Bar Makers Pay 2,000-4,000 yen/t More for Scrap

Japanese brass bar makers increased purchase price of brass turning scrap by 2,000-4,000 yen per tonne in July. The makers accepted certain level of higher price when the scrap dealers seek higher price under slump in scrap generation. The makers try to secure the materials to keep monthly 16,000 tonnes level of production in July-September.

Major brass bar makers increased the scrap purchase price in July. Many of the makers pay for the scrap at around 10,000 yen per tonne lower level from Nippon Shindo’s official purchase price for April-June. But the makers pay 7,000-9,000 yen lower level from Nippon Shindo’s price in July. The reduction could be 5,000-6,000 yen level for spot transaction. The reduction reached 13,000-15,000 yen level in January-March 2009 but the reduction recovered the level before Lehman shock.

The scrap generation is getting severe when the main suppliers of small processing plants keep still low level operation. The supply is expected to keep slow under recent decreasing copper market. With smaller transaction volume, the scrap dealers try to keep profitability by improving the margin.

Japanese brass bar demand hit bottom mainly for housing industry. The brass bar makers keep the current operation level through July-September. The makers had no choice but to accept certain higher scrap price to keep the operation. The dealers try to keep the supply volume with the higher price while the dealers planned to reduce the supply from July. However, a dealer said if they keep the supply volume for term contract, they have no additional material for spot transaction.