Japan Ferrous Scrap Price to Hit Bottom

Japanese ferrous scrap market price shows sign to hit bottom recently. Steel makers’ scrap purchase price around Osaka increased for the first time in near 2 months when local integrated steel and special steel plants keep high level consumption while the price didn’t increase in other areas. A yard dealer source sees the better market is partly due to lower dealers’ inventory under decreasing market price and lower scrap generation after a week long holiday in early May. The price is also supported by coastal yard dealers’ move to restart securing scrap.

Electric furnace steel makers around Tokyo pay 29,000-30,500 yen per tonne for H2 grade scrap. They reduced the purchase price widely since early May but the price keeps stable since early June.

Local steel makers’ consumption around Tokyo stays at low level. However, a dealer source expects with higher price around Osaka, the scrap price gap between Tokyo and Osaka will get wider. The dealer expects the wider price gap could encourage scrap shipment from Tokyo to Osaka area and improves supply balance around Tokyo.

Electric furnace steel makers around Osaka pay 29,500-31,000 yen per tonne for H2 grade scrap. Osaka Steel increased the purchase price on Tuesday, which was the first increase since late April. Other makers followed the move by Thursday and the local averaged price level reached 30,000 yen.

A dealer source in Osaka expects local scrap purchase volume by integrated steel plants would reach peak level in July. The dealer expects some dealers could build inventory especially for high grade scrap and coastal yard dealers could restart aggressive effort to secure scrap under higher price expectation.