Japan Ferrous Scrap Price Rebounds

Japanese ferrous scrap price rebounded recently under low level scrap generation and higher export price. Some electric furnace steel makers increased the purchase price last weekend, which was the first increase in 3 weeks, while the purchase price increased in Osaka. The price is expected to increase more when electric furnace steel makers build scrap inventory preparing for 5-day holiday starting the weekend.

Japanese scrap export price is around FOB 30,500 yen per tonne for H2 grade to East Asia, which is 1,000-1,500 yen higher than the level in the beginning of the month. The export transaction is thin but the price level is higher than domestic purchase price by steel makers.

Electric furnace steel makers around Tokyo increased the scrap purchase price by 500-1,000 yen to 27,000-28,500 yen per tonne for H2 last week to encourage the dealers’ shipment. The purchase price is 29,500-31,500 yen around Osaka, which is 500-1,000 yen higher than previous week.

Domestic steel makers’ scrap consumption increased in July from June, which represented increases for 5 months in a row, according to Japan Ferrous Raw Materials Association. The consumption increased by 7.7% to 3.109 million tonnes, which hit 3 million tonnes for the first time since November 2008. The consumption increased by 27.1% to 951,000 tonnes by converter and decreased by 0.8% to 1.711 million tonnes by electric furnace. The steel makers increase the production while the scrap generation is relative slower than the pace of consumption increase.