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Extraordinarily High Nickel Price Causes To Rise Price Of Stainless Scrap To Yen 170,000 / Ton
= Operation Rate To Produce Stainless Steel In Japan Is Expected to Raise To Level Of 90% From September
Because of the rushed nickel purchases, LME nickel prices in the afternoon market at the 4th August of 2009 had risen to the level of US$19,000 per ton in both for cash and for three-month futures. Therefor, LME nickel prices have risen to the highest level since August of 2008 and developed to the highest ones, as never seen from the beginning of this year, with successive renewals for the last 2 days, having excited the market. In expectation of a further rise of nickel price for the near future, the temporary demand for stainless steel products, including speculation, has arisen.

Reflecting this sharp rise of LME nickel prices and in view of the scarce generation of stainless steel scrap, domestic price of nickel-based stainless steel scrap (new clippings) in Kanto area has risen by Yen 5,000 per ton to Yen 170,000 per metric ton ex. yard in comparison with the price ruled on the 3rd of August.

The realities, which quantity of stainless steel scrap to be generated in Japan has decreased and supply situation of this scrap has tightened further, are still unable to change, even if nickel price rises rapidly to a further extent, and price of nickel-based stainless steel scrap is being pushed up by high nickel price. In consequence of a further rise of LME nickel prices, the price of Yen 170,000 per metric ton for nickel-based stainless steel scrap is equivalent to 76.2% of LME nickel price.

The levels, having operated facilities to produce stainless steel in the first half of 2009, were <> in January - March quarter : operated by 40 - 50% of nominal capacity and <> in April - June quarter : operated by 50 - 60% of nominal capacity, and the operation in July had recovered to the level of 70 - 80%. In addition, since the demand for stainless steel products from domestic market of Japan has trended to recover in August and, accordingly, the operation rate in this month has raised to 90% of nominal capacity.

For a reference, major stainless steel companies in Japan have maintained a favorable tone on their production and the production of stainless steel in September to October is expected to enter into the 100% operation. By taking a chance on high nickel price, the temporary demand for stainless steel products has arisen in both of domestic market and overseas market. The stainless steel industry of Japan produced stainless steel products in spring of this year with the ratio of 30% for domestic sales and 70% for exports but, under the present situation which domestic demand for stainless steel products in Japan has been on the way to recover, the ratio in production of stainless steel products is being improved to 50% for domestic sales and 50% for exports.

Owing to a substantial recovery of requirements of raw materials for production of stainless steel, the stocks of raw materials, excluding ferro-chrome, held by stainless steel mills in Japan have shrunken to a considerable extent and the parties concerned in purchases are now suffering from an opaqueness for prices of raw materials in the future.
last modified : Tue 11 Aug, 2009 [10:25]
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