Exports force Japan’s domestic ferrous scrap price up
Among the mini-mills, Tokyo Steel Manufacturing, Japan’s top electric-arc-furnace producer, announced late on May 26 to lift its scrap buying prices by another Yen 500-1,000/t from May 22 for deliveries of all grades to all its four works and its steel distribution center starting May 27.
With the latest adjustments, the steel mill is paying Yen 20,500/t for the H2 materials via trucking and water deliveries to its Tahara works in central Japan, up Yen 1,000/t, and Yen 20,000/t for the scrap deliveries to its Utsunomiya works, north Tokyo, or up Yen 500/t, and the scrap price increments to the other works are all Yen 500/t, according to the company.
The recent competition with the overseas buyers for the limited materials has forced Japan’s other mini-mills to follow the practice of Tokyo Steel by raising their scrap procurement prices by similar degrees, according to market sources.
“Some mini-mills are paying even higher than Tokyo Steel, so the latter may find it still hard to get hold of materials even after the price rise,” a scrap trader said.
Mini-mills in Kanto area, for example, are paying Yen 20,000-21,000/t for H2 supplies, up Yen 1,500-2,000/t from early May, confirmed market sources.
Meanwhile, Japanese scrap has been rather popular, with 60,000 tonnes to be loaded from the Tokyo Bay area as per schedule within this week, according to a Tokyo trader.
“It is comparatively high especially when Japan’s scrap generation has been constrained by slower building demolition works (during the virus outbreak curtailing since April), and scrap distributors are more willing to sell to the shippers for exports for higher prices, resulting in lower volume to the domestic mini-mills,” he added.
As of May 27, most of the Japanese shippers are paying around Yen 22,500/t FAS for H2 materials to be loaded for exports from the Tokyo Bay, up another 1,000/t from late last week, with some paying even higher to secure cargoes, according to the market sources.
In the near term, Japan’s steel scrap supplies will probably stay stretched, according to an official from a domestic mini-mill, noting that building demolition works have not revived much even though Japan’s state of emergency across Japan was lifted on May 25.
“The restrictive measure had been set to be in place until May 31, and the rainy season will start in June, so scrap generation will be unlikely to increase fast, but fortunately our steel production has not been high, so we will just need to fulfill the basic needs,” he said.
Japanese traders have reported receiving consistent inquires of new scrap orders from South Korea and Vietnam, though no deals have been signed yet, with the offerings at Yen 24,000/ FOB or $260/t CFR Vietnam for H2 scrap, the same on week.
The latest bookings for Japanese scrap exports were on May 21 with one from a South Korean mill at Yen 26,200/t CFR for H1/H2 50:50, or equivalent to Yen 23,500/t FOB for H2 material, and another from Vietnam at $250/t CFR for H2 material, according to market sources.
Written by Yoko Manabe, yoko.manabe@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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