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| Japan's Local Scrap Market Conditions On Enhanced Upswing |
| = Kanto No2 HMS Benchmark Up To Y35,000-35,500 Ex Steelworks |
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Japan's domestic market conditions for locally available ferrous scrap indicate an enhanced upswing in prices. Market prices have already advanced by a cumulative Y10,000/ton in nearly 70 days since the beginning of 2010. Signs of an ascending market are still predominant, a situation where domestic electric steelmakers look as if they are screaming out for help. Meanwhile, Japan's ferrous scrap export market for new deals has regained momentum until now after a quiet market in February. As if to meet an active export market, the nation's largest electric steelmaker Tokyo Steel Mfg Co is poised to respond accordingly with an increase in what the company pays for local ferrous scrap. With the export market perking up and Tokyo Steel willing to pay increased prices, domestic market prices of local ferrous scrap are on the upside across the nation, in which integrated steelmakers are enlarging their presence as well with their purchases of local ferrous scrap. The following are how things stand in main trading area of local ferrous scrap. Kanto area Benchmark prices of No2 HMS ex steelworks are Y35,000-35,500/ton, with a high of Y36,000/ton. Reactions to Tokyo Steel's purchase price increase from March 12 vary among fellow electric steelmakers. Several electric steelmakers increased what they pay for local ferrous scrap by Y500-2,000/ton from March 12-13. Among them are Itoh Iron & Steel Co, Kanto Steel Ltd, Sanko Steel Co, JFE Bars & Shapes Corp, Jonan Steel Corp, Daiwa Steel Corp, and Tokyo Tekko Co. Meanwhile, other electric steelmakers look set to mark time or poised to pay incentives in their purchases of local ferrous scrap. Tokyo Bay area FAS prices have further advanced to Y35,500-36,000/ton for the benchmark of No2 HMS after a pervasive increase of Y1,000-1,500/ton from March 12. At the Kawasaki municipal wharf, an ex yard price of Y36,000/ton for No2 HMS is the norm of arrivals at main waterfront yards. By comparison, the latest contract price of No2 HMS is settled at around Y35,200/ton FOB for export shipments to South Korea. Ex yard prices of high-grade ferrous scrap have moved up to Y39,000/ton for P&S steel scrap and Y38,500-39,500/ton for Shindachi, a high price level that contrasts with the new export prices under contract for the two high grades. On their part, trading companies have no idea of hastening to settle new export deals of ferrous scrap. The find it possible to sell ferrous scrap cargoes at high prices for domestic shipments because integrated steelmakers are ready to pay high prices for what they take. As a result, there is no doubt that purchases of local ferrous scrap by domestic users, mainly integrated steelmakers, account for the current price formation in which "domestic shipments are fetching high prices, with export deals at low prices" irrespective of whether all the cargoes diverted from export deals can be sold for domestic shipments, market observers agree. In the case of JFE Steel Corp, the integrated steelmaker is poised to execute a continued increase in what the company pays for local ferrous scrap in the Kurashiki and Fukuyama divisions of its West Japan works. The idea is to meet Tokyo Steel's purchase price increase. As a result, JFE Steel's current purchase price of P&S steel scrap is higher by nearly Y2,000/ton on FOB terms than a South Korean steelmaker's bid of Y41,000/ton C&F last week for the P&S grade from Japan, given freight rate differences as well. Therefore, what JFE Steel pays for P&S steel scrap amounts to the current benchmark of prices for high-grade material, many of market sources point out. Osaka area Marked moves for price revisions are limited in electric steelmakers' purchases of local ferrous scrap. Only three electric steelmakers raised what they pay from March 13. Godo Steel Ltd executed a price increase of Y1,000/ton, Shinkansai Steel Corp that of Y1,500/ton, and Kishiwada Steel Co that of Y1,700/ton. Many of other electric steelmakers favor adding an incentive to what they pay without changing their purchase prices on the surface. The going prices of No2 HMS ex steelworks are Y34,000-35,000/ton, with a high of over Y36,000/ton. Benchmark prices of Shindachi ex steelworks are Y38,000-38,500/ton. Most of the ferrous scrap dealers are taking a bullish view of the market prospects. Among other things, it appears they are waiting for the Osaka market to rise to what will compare with the current market conditions in other areas such as Himeji and Okayama. Himeji area Until now, four electric steelmakers have increased what they pay for local ferrous scrap. Godo Steel Ltd, JFE Bars & Shapes Corp and Yamato Steel Co have executed a price increase of Y1,500/ton each, while Sanyo Special Steel Co have executed that of Y2,500/ton. As a result, Yamato Steel sets the new delivered price of No2 HMS at Y36,500/ton for overland arrivals. At the same time, the company is committed to a freight rate subsidy of Y500/ton for suppliers of overland arrivals. The going prices of No2 HMS ex steelworks are Y36,500-37,000/ton. |
| last modified : Fri 19 Mar, 2010 [10:45] |
