Ferrous Scrap Price Drops by up to 2,500 yen in Tokyo, Osaka

Ferrous scrap purchase price by scrap dealers around Tokyo decreased by about 2,000 yen per tonne in last week, which is the first drop in 2 months. The market price is around 12,000 yen per tonne for H2 grade, 13,800 yen for H1 grade and 15,500 yen for HS grade. Local electric furnace steel makers reduced the scrap purchase due to the smooth scrap supply under slower export.

The supply is more than demand when most electric furnaces limit the scrap purchase and export slows from Tokyo bay. A trade firm source pointed the supply gets easier though the generation decreases.

Tokyo Steel Manufacturing and other electric furnace steels reduced the purchase price twice in last week and the purchase price declined by around 2,000 yen to 18,000-19,000 yen per tonne for H2 grade.

The dealers’ procurement is still hard due to limited supply. A dealer source said the purchase volume from manufacturers is 40% less than normal level. The lower supply is partly due to collapse of scrap generation chain after period when small generators made loss in late 2008.

Scrap purchase price by dealers around Osaka is 10,500 yen per tonne for H2 grade at the beginning of March, which is 2,500 yen or 19% less than February level. Local electric furnace steels’ purchase price is 17,000-18,000 yen per tonne for H2 grade and some makers pay as high as around 19,500 yen.

Local electric furnace steels around Osaka reduced the purchase price in February wider than the makers in other areas. But local dealer source expects the purchase price by electric furnace steels would decrease more when the supply would be smooth until start of the shipment for joint export contract. The purchase price reduction makes the dealers’ procurement hard when the scrap generation slows. The dealer source said they must pay higher price for the large volume scrap including bulk scrap from demolish work.