Japan Electric Furnaces to Regain Profitability with Lower Scrap Cost

Japanese electric furnace carbon steel makers expect to regain profitability in September due to sharp drop of ferrous scrap price. They enjoy higher margin when the scrap price decreased by more than 30,000 yen per tonne or 40% since July. Godo Steel and Hokuetsu Metal, which expected loss for the half year to September, could revise the output upward and the makers’ results could improve for the full year. The makers expected around 65,000 yen per tonne of scrap cost as of April but the price hit 70,000 yen in July. The higher cost suffered the makers with time lag for realized selling price despite of the historical high selling price. However, the scrap price plunged to around 38,000 yen around Tokyo while the makers’ averaged shipping price is expected to reach 90,000 yen for concrete reinforcing steel bar in October. Many Japanese interests expect ferrous scrap price could rebound again. The scrap price shows sign to hit bottom when Hyundai Steel and other offshore makers restarted purchase of Japanese scrap. Japanese electric furnaces try to keep the selling price preparing for potential higher scrap cost.