Electric Furnaces Raise Ferrous Scrap Buy Price in Osaka

Osaka’s electric furnace steel makers increased the ferrous scrap purchase price to the peak level in April. The price increased to 38,000-39,500 yen per tonne for H2 grade, which is 500 yen higher than last week under the tight scrap generation from the market. Tokyo Steel Manufacturing increased the purchase price to 40,000 yen for H2 grade scrap with land transport to Okayama plant on August 2. Local makers face the high scrap market when they plan output increase during major holiday in mid-August.

Local makers reduced the scrap purchase price by around 3,000 yen per tonne or 7% since May. Their scrap purchase price is around 12,000 yen or 45% higher than the price in a year earlier. They get smaller scrap arrivals from the market with slower generation and strong demand from integrated steel makers. The electric furnaces try to secure the materials from western Japan and Tokyo areas.

Japanese largest electric furnace steel of Tokyo Steel pays 39,000 yen per tonne for ocean freight H2 grade and 40,000 yen for land transport on Tuesday, which is 11,500 yen or 42% and 12,000 yen or 45% higher than a year earlier respectively, to secure the materials.

The makers could reduce the scrap purchase price after the mid-August holiday. However, the higher cost for ferroalloy and other factors could keep the production cost high. The scrap dealers expect the scrap market keep high even after the holiday when the scrap could be shipped 5,000 tonnes for existing order and 15,000 tonnes for potential order from Osaka area.