Japanese Electric Furnaces Concerned on Ferrous Scrap Price Rebound

Japanese electric furnace carbon steel makers are concerned about ferrous scrap price rebound though they are expected to recover the monthly black in June when ferrous scrap price decreased by more than 10,000 yen per tonne. A large dealer source said scrap orders are currently increasing from South Korea and China. Domestic market price is around 30,000 yen per tonne in Tokyo and Osaka while the price is expected to approach 40,000 yen in July. Meanwhile, price hike penetration is slow for steel products.

Electric furnaces presently purchase ferrous scrap at around 29,000-30,000 yen per tonne. The price has lowered by more than 10,000 yen since the beginning of May. On the other hand, their rebar selling price has increased to 55,000-59,000 yen per tonne from 50,000 yen level in the beginning of May. Steel makers are likely to recover the monthly black in June though they posted the red in April-May.

Ferrous scrap price seems to rise in or after July with the order increase from South Korea and China. Even in Japan, construction market hit the bottom mainly in large cities and electric furnace steel makers have gradually increased output volumes since April. Steel makers try to raise rebar price to more than 70,000 yen per tonne based on cost estimation at average 40,000 yen per tonne for fiscal 2010 ending in March 2011.