Japan: EAF mills in Kanto hike scrap purchase prices after two-month gap

Electric-arc furnace (EAF) steel manufacturers in Japan's Kanto region slightly increased ferrous scrap purchase prices by JPY 500-1,000/tonne (t) last week in response to a decline in shipments, according to a Japan Metal Daily (JMD) report.

Post-revision, purchase prices of H2 scrap stand at JPY46,500-47,500/t as of 29 May. Prices even touched the levels of JPY48,000/t.

Notably, this is the first increase in scrap purchase prices by Kanto EAF steelmakers after a gap of two-and-a-half months. The last increase was seen in early-March.

Meanwhile, as cargo movement is increasing towards the end of the month, the next shipment of the 5,550-t order of Kanto Railway Source Cooperative Association will not be carried out this week but will be shipped next week, over 5-8 June.

Shortage in imported scrap

There was a persistent shortage of imported material from the US due to which prices of the same soared, leading to its tight supply to Japan's EAF mills.

On the other hand, overseas demand continues to be sluggish as buyers have adopted a wait-and-watch stance. Thus, as said a buyer, the potential for an upward price trend will be limited.

In the Kanto Bay area, imported shipments boomed in the middle of this month, and thus US prices had declined.

But after that, suppliers raised their offers over last week in response to the demand.

Depreciated yen encourages exports but demand weak

On the other hand, depreciation of the Japanese Yen remains a strong factor for exports. But overseas demand, particularly from South Korea and Vietnam, has not yet fully recovered. The fact that cheap billets of just over $500/t CFR from Russia and China are being exported to the Asian market is also a weak factor for Japanese scrap exporters.

Note: This article has been written in accordance with an article exchange agreement between Japan metal daily and SteelMint.