Japan Ferrous Scrap Price to Hit Bottom

Japanese scrap market price shows sign to hit bottom when the export price is hitting bottom for Asian market. A trading firm source said the tight scrap supply also supports the price while the market expects higher demand when electric furnace steel makers to build scrap before 5 days holiday from September 19.

The electric furnace steel makers could increase scrap purchase price to build inventory. The makers consumption is only around 60% of the peak in 2008 while the scrap generation is estimated to be 30-40% lower than a year earlier level under slow building activity. A trading firm source expects temporally higher demand from steel makers to build scrap inventory could lift the scrap price.

The scrap export is slow to East Asia recently. The price is around FOB 29,000 yen per tonne for H2 grade to South Korea, which is around 3,000 yen lower than the recent peak in mid-August. However, the offshore buyers increase the demand to Japanese scrap while the exporters try to avoid low price order receipt.

Electric furnace steel makers pay 27,000-28,500 yen per tonne for H2 around Tokyo. Many of the makers keep the purchase price since end of August. The consumption is expected to increase in September from summer time maintenance outage in August.