Japan: Tokyo Steel hikes domestic scrap purchase price on improved demand

Japan’s leading EAF mini mill- Tokyo Steel has announced an increase its scrap purchase price by JPY 500/t ($5) for one of its four plants amid overall stronger demand from local mills. Revised prices have come into effect from today (3rd Nov’20).

After price hike, the company would pay JPY 27,500/t ($262) for H2 scrap delivered at its Tahara plant in Central Japan, Kyushu and Okayama works. However, the bid price for the Takamatsu plant stands at JPY 26,500/t ($253). Despite the increases, the Utsunomiya plant in the Kanto region has been kept unchanged since 10th Sep’20 and remains unchanged at JPY 26,000/t ($248). Some of the major reasons enumerated as-

• Domestic steel demand is not sighted an improvement and Utsunomiya plant output is very low as they have enough scrap for production, so Kanto bids are not very reflective of the current market condition
• Scrap export deals from Japan remained on the lower side due to tighter shipments. Last week, South Korean steelmaker has booked higher grade scrap around 20,000 t of Japanese shindachi and shredded at JPY 33,000/t and JPY 32,500/t CFR basis respectively, as per SteelDaily
• Stronger Japanese Yen was another factor supporting prices. JPY is trading at 104.7 versus $ compared to 106 levels seen in 1st week of Oct’20
• SteelMint’s assessment for Japanese scrap export stands at JPY 27,500/t FoB Japan, up by JPY 500/t w-o-w.

Tokyo Steel‘s bids for scrap purchase from 3rd Oct’20Price in JPY
Source: Tokyo Steel report

Japanese ferrous scrap exports rise 13% in Sep’20
Japan – the world’s third largest ferrous scrap exporter, witnessed a rise in its scrap exports by 13% to 0.72 mn t in Sep’20 as against 0.64 mn t a month ago, as per customs data maintained with SteelMint. Slowdown in purchases to Vietnam on increasing offers in end July-early Aug’20, boosted export.

Vietnam scrap imports down by 7% m-o-m – Vietnam continued to be the largest buyer of ferrous scrap from Japan and imported 0.27 mn t in Sep’20, lower by 7% m-o-m. Vietnam’s import scrap demand is supported by mills that have sustained steel export business and are relying on blast furnaces or induction furnaces with lower production costs.

Other key importers were South Korea and Bangladesh with volumes of 0.24 mn t and 0.10 mn t respectively in Sep’20.