- Domestic EAF mills follow Tokyo Steel’s price reduction
- Vietnam export values decline amid stronger Japanese yen
Iron scrap purchase prices in Japan’s Kanto region continued to weaken this week, with H2 purchase prices by electric arc furnace (EAF) mills falling below JPY 50,000/t ($317/t) for the first time in nearly four months. The decline was driven primarily by the rapid appreciation of the Japanese yen, which significantly altered export economics and reduced the competitiveness of Japanese scrap in overseas markets.
Following coordinated currency intervention by the Japanese and US authorities, the JPY strengthened sharply from around JPY 163/$ last week to the JPY 155-158/$ range. The stronger currency reduced exporters’ margins, prompting domestic mills to revise procurement prices lower. In response, Tokyo Steel reduced H2 scrap purchase prices by JPY 500/t ($3/t) across all plants from 5 August, with other domestic EAF producers quickly following the move. As a result, H2 purchase prices in the Kanto region settled around JPY 49,000-50,000/t ($311-317/t).
Tokyo Steel stated that the latest reduction was entirely driven by exchange rate movements. Although the appreciation of the JPY justified even deeper cuts, the company opted for a cautious approach to avoid excessive market disruption. The Tahara plant implemented a larger JPY 1,500/t ($10/t) reduction as part of a separate adjustment.
The stronger JPY has also weakened Japan’s export competitiveness. H2 scrap export negotiations to Vietnam have reportedly fallen to around JPY 48,000-49,000/t ($304-311/t) FOB, reflecting lower achievable export values. Market participants noted that export sentiment has softened despite relatively stable overseas demand.
Meanwhile, collection prices in the Kanto Bay area also declined to JPY 47,500-48,000/t ($301-304/t), remaining below domestic mill buying levels. With exchange rate volatility continuing and export competitiveness under pressure, market participants believe there remains room for further price negotiations in the domestic scrap market.
Note: This article has been published in accordance with a content exchange agreement between SteelDaily and BigMint.
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