Japan: Scrap market turns cautious on currency appreciation

• Western Japan sees easing supply-demand balance
• Tokyo Steel trims prices amid strong arrivals

Japan Metal Daily: Japan’s domestic steel scrap market showed mixed signals in late January, with easing supply-demand conditions emerging in western regions even as broader market sentiment remained cautious and highly sensitive to exchange-rate movements. While scrap tightness persists nationwide due to subdued generation, reduced procurement by electric furnace mills has begun to weigh on prices in Kyushu and parts of western Japan.

Tokyo Steel responded by cutting purchase prices by JPY 500/t ($3/t) at its Kyushu plant on 10 January and 27 January, followed by a similar reduction at its Okayama plant effective 29 January.

Market participants commented strong scrap arrivals and the recent appreciation of the yen as key drivers behind the adjustment. A senior procurement executive noted that both exchange-rate movements and inflow conditions influenced the Okayama cut, while price reductions were implemented selectively at locations where arrivals remained smooth.

In Kyushu, sluggish buying from surrounding manufacturers and furnace shutdowns at some mills have led to scrap volumes concentrating at Tokyo Steel facilities. In Kansai, tightness persists in higher-grade scrap, but demand for other grades remains weak, reflecting uneven regional fundamentals.

In contrast, supply conditions in the Kanto region remain relatively tight, supported by high shipment volumes and the start of 20,000 t vessel shipments by the Kanto Tetsugen Cooperative. Earlier this month, Tokyo Steel had briefly aligned purchase prices across all plants at JPY 44,000/t ($285/t) before regional disparities resurfaced.

Market participants highlighted that recent JPY appreciation, following sharp currency corrections, added pressure to domestic scrap prices. However, uncertainty around future forex movements-amid mixed signals from US monetary and currency policy-has left the market without a clear directional bias.

As one producer noted, domestic scrap market trends remain closely tied to exchange-rate movements, with participants continuing to monitor the yen for cues on pricing direction.

Note: This article has been written in accordance with a content exchange agreement between Japan Metal Daily and BigMint.