Japan Ferrous Scrap Price Turns Strong

Japanese ferrous scrap market price is turning to strong tone. Ferrous scrap supply has even tightened since December 2009 while Japanese ferrous scrap export volume and price are expected to rise bound for East Asia.

Ferrous scrap price is surging in East Asia. South Korea is actively purchasing ferrous scrap. Japanese large dealer source said East Asian market price pulls up Japanese domestic market price.

Japanese ferrous scrap price already turned upward at some quays at the beginning of this year. Japanese integrated steel makers are raising their purchase price for ferrous scrap. Japanese electric furnace steel makers may also raise their purchasing price though they continue output reductions. Ferrous scrap supply volume is said to be decreasing by about 30% compared with 2008.

Electric furnace steel makers in East Asia keeps favorable productions mainly in South Korea and China. Ferrous scrap consumption is increasing. South Korean steel makers raised the purchase price to CFR US$ 350 per tonne for HMS grade from USA.

South Korean steel makers are expected to increase procurement of Japanese scrap when US ferrous scrap price is rising. Japanese large dealer source said Japanese exporters would raise the export price to above FOB 28,000 yen per tonne for H2.

Japanese electric furnaces pay around 24,000-25,000 yen per tonne for H2. A large dealer source said domestic electric furnaces cannot increase scrap procurement if they keep the purchase price at the current level.