Ferrous Scrap Market Price Levels Off around Tokyo

Ferrous scrap market price presently levels off around Tokyo, which had dropped from mid May to early June. Market players are in wait-and-see mood when offshore scrap importers currently shifted to conclude new contracts. Local scrap dealers now pay 24,000 yen per tonne for H2, down by 5,000-6,000 yen from the beginning of June. Local electric furnace steel makers purchase H2 at 29,000-30,000 yen and some pay as high as 30,500 yen.

Local market price downturned in mid May when export price declined and the number of new export contracts decreased. This was the first price down in 7 months. Scrap dealers increased the shipment to local electric furnaces. As a result, Tokyo Steel and other major steel makers reduced the purchase price step by step since mid May. Local electric furnaces’ purchase price lowered by 8,000-9,000 yen per tonne from the peak in late April.

In mid June, Chinese and Taiwanese scrap importers restarted to conclude new contracts for Japanese ferrous scrap. The latest contract price is around 27,000 yen per tonne for H2, still lower than the purchase price by domestic steel makers. A dealer source said domestic market price couldn’t rebound strongly despite of emergence of new contracts due to low price. However, domestic market mood is slightly improving.

Operations of electric furnace carbon steel makers stay low but maintain the certain level. Meanwhile, scrap inventory seems not abundant at most dealers’ sites since scrap generation keeps low and dealers accelerated shipment when the market price declined. A trader said the supply and demand would keep balanced for a while.