Ferrous Scrap Price Rebounds in Tokyo, Osaka

Japanese ferrous scrap market price turned into increase due to low level supply and higher demand from East Asia while the price kept the level since end of April. Some steel makers in Tokyo and Osaka increased the scrap purchase price by 500-1,500 yen per tonne in the week. The domestic price could increase more when the price is lower than export transaction price for East Asia.

The demand from offshore buyers increases after major holiday week in early May resulting in new transaction. The price is around FOB 24,000 yen per tonne for H2 grade, which is 1,000 yen higher than the beginning of the month and 2,000 yen higher than domestic market price.

With the higher export price, some electric furnace steel makers around Tokyo increased the scrap purchase price by 1,000-1,500 yen per tonne for H2 in the week. The averaged purchase price is around 21,000-22,000 yen. The scrap supply is tight despite of large production cut by local steel makers. The supply balance could continue when the scrap export shipping continues under tight supply.

Electric furnace steel makers around Osaka pay 20,000-21,500 yen per tonne for H2 scrap. The raw steel production around Osaka is expected to be less than 300,000 tonnes in May, which is as low as April level. However, the scrap supply is tight, especially for H2 and lower grade scrap due to low level local supply and high level scrap shipping. Some electric furnace steel makers increased the scrap purchase price and purchase scrap at spot basis after the major holiday week. A trading firm source said local dealers are reluctant to ship scrap to local steel makers when the export and local spot purchase price is higher than the makers’ purchase price.