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| Japan's Local Scrap Prices Headed Up In Kanto, Kansai Areas |
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No2 HMS Benchmarks At Y33,000-33,500 In Kanto, Y33,000-34,000 In Osaka Japan's domestic market prices of locally available ferrous scrap are trending upward in the Kanto area in the east of the nation and in the Kansai area (Osaka westward) in the west. For the reason, ferrous scrap dealers are taking a bullish view of the market prospects. They see factors such as tight supply-demand conditions for local ferrous scrap in slack arisings, overseas ferrous scrap market on the upswing, and the outlook for a major advance in the prices of iron ore and coking coal. With the current environment, electric steelmakers facing small ferrous scrap stocks at their works have no option but to live with increases in what they pay for local ferrous scrap. The nation's top electric steelmaker Tokyo Steel Mfg Co increased what the company pays for local ferrous scrap by a uniform Y500/ton from March 4 for all grades at its five works. But follow-up moves are limited among other electric steelmakers and trading companies holding captive waterfront yards in the Tokyo Bay area. Incentive payments have already pervaded other electric steelmakers in their purchases of local ferrous scrap. Besides, the trading companies face a virtual loss margin each in the procurement of ferrous scrap cargoes for export. In the Kanto area, benchmark prices of No2 HMS ex steelworks were Y33,000-33,500/ton as of March 4. Low prices of Y32,000-32,500/ton ex steelworks remained in the north of the area, while high prices stood at Y34,000-34,500/ton ex steelworks in the south. Among electric steelmakers operating in the Kanto area, some companies increased what they pay for local ferrous scrap from May 4-5 purchases. They include Asahi Industries Co, Godo Steel Ltd, Tokyo Kohtetsu Co, Tokyo Tekko Co, and Chuo Atsuen. In the Tokyo Bay area, most of the ex yard prices remain unchanged. Benchmark FAS prices are changing little in ranges of Y33,000-33,500/ton for No2 HMS and Y36,000-36,500/ton for Shindachi and P&S steel scrap. By comparison, South Korean steelmakers' latest bids for No2 HMS from Japan stand at a level of Y32,500-33,000/ton FOB, which indicates a stalemated situation for new export deals of Japanese ferrous scrap. There are signs of ferrous scrap export shipments dwindling in the Tokyo Bay area under the existing supply contracts in massive quantities that were concluded in January. As a result, there is a view that electric steelmakers operating in the Kanto area could enjoy a gradual increase in arrivals of local ferrous scrap at their works before long. In the Osaka area, too, prices of local ferrous scrap show a continued upswing. There are many cases of No2 HMS selling at Y33,000-34,000/ton ex steelworks, with a high of Y35,000/ton in part. On its part, Godo Steel Ltd increased what it pays for local ferrous scrap from March 4 at its Osaka works. But other electric steelmakers keep their purchase prices unchanged. In the Osaka Bay area, there are signs of tight supply-demand conditions for local ferrous scrap. Having a major impact are joint export shipments under way at Amagasaki port for cargoes from the Osaka-based Kansai Tetsugen federation of ferrous scrap dealers. Member dealers give priority to providing cargoes for the joint export shipments. But signs of an alert have begun to drift as to the prospects of the Osaka market for local ferrous scrap after the cancellation of the tender held by the cooperative association of Osaka-based metal recyclers. The tender to sell 5,000 tons of No2 HMS proved abortive for lack of bids to meet the association's expectations. As market sources see it, there are no fears of a downturn in the Osaka market for local ferrous scrap since no change exists so far in the external environment such as overseas ferrous scrap markets. Still, they admit that an upswing in the Osaka market may slow down. In the Himeji area, four electric steelmakers raised what they pay for local ferrous scrap by Y500/ton each, effective with March 4-5 arrivals at their works. As a result, Yamato Steel Co applies the new delivered price of Y32,500/ton to No2 HMS for overland arrivals at its Himeji works. At the same time, the company is committed to a freight rate subsidy of Y500/ton for suppliers of overland arrivals. The current benchmark prices of No2 HMS ex steelworks are Y32,500-33,000/ton in the Himeji area. |
| last modified : Thu 11 Mar, 2010 [10:38] |
