Japan Ferrous Scrap Price to Drop

Japanese ferrous scrap demand is expected to keep decreasing in and after December. Domestic electric furnace steel makers try to build scrap inventory toward yearend and New Year holiday. However, the steel makers plan lower operation during the holiday under very slow steel demand. Ferrous scrap dealers expect the demand is lower than usual year during the holiday. Hyundai Steel reduces the purchase price for Japanese scrap when the price is relative higher than US scrap under higher yen rate.

Hyundai Steel purchased US scrap at CFR US$ 325 per tonne for no.1 heavy melting scrap. The steel maker reduced the purchase price for Japanese scrap to FOB 25,500 yen per tonne for H2 grade as the level of US scrap.

Electric furnace steel makers around Tokyo pay 24,000-25,500 yen per tonne. The export shipping from Tokyo bay for existing order supports local supply balance. Steel makers around Osaka reduced the scrap purchase price by 1,500 yen or 9% to 23,500-25,000 yen for H2 grade.

A dealer expects the scrap price couldn’t decrease significantly in January due to slower scrap generation. South Korean steel makers are expected to keep purchasing Japanese scrap but the industry concerns the higher export to South Korea could cover lower demand in China and Southeast Asia.

Domestic electric furnace steel makers could face lower demand in January-March from October-December. The scrap demand could decrease in January-March when the makers’ profitability gets worse.