Higher Stainless Scrap Price in Tokyo

Stainless steel scrap price increased by 30,000-40,000 yen per for SUS304 grade with 18% chrome and 8% nickel around Tokyo. The price increased by 300,000 yen per tonne since January 2006 under higher nickel ingot price in London Metal Exchange and higher demand for domestic stainless makers and for Chinese output increase. The scrap price reached 420,000 yen per tonne for new cutting grade, hitting first 400,000 yen. The dealers expect the tight supply balance will continues. Japanese stainless makers keep full capacity operations to meet strong stainless demand. They temporally reduced the scrap purchase price under higher yen rate but they stopped the reduction when yen exchange rate again moved to lower. A trading firm said domestic stainless makers try to secure materials even at higher price. The higher demand lifted the scrap market price.Higher export volume, especially for China also increased the domestic scrap market price. Japanese scrap export to China increased to record 107,650 tonnes in 2006 from 32,890 tonnes in 2005. The higher export trend continues in 2007. The domestic scrap market has kept high level without major drop since 2006 when domestic stainless makers increased the purchase price and export price increases. Japanese stainless scrap interests from suppliers to scrap yard dealers try to keep the materials with expectation higher price. The speculation also reduces the supply to stainless makers. LME nickel ingot cash price reached record US$ 22.36 per pound on Thursday. A trading firm source said tight supply lifted the market with less than 4,000 tonnes of LME inventory, which represents less than daily world consumption along with aggressive purchase by China and speculators.