Japan: Kanto region HS scrap prices rise amid strong overseas demand

In the Kanto region's bay yards, high-grade steel scrap types, HS and shindachi, maintained high purchase prices due to better demand, both domestically and internationally. Conversely, standard-grade H2 scrap faces weak demand.

The price gap between high-end varieties and H2 is widening, currently around JPY 5,000/t($31/t), compared to a normal difference of JPY 1,000-2,000/t($6-12/t). The price gap between high-end scrap and H2 exceeded JPY 10,000/t ($62/t) in the summer of 2021, driven by China resuming steel scrap imports and expectations of increased purchases by blast furnace manufacturers aiming for carbon neutrality.

H2 prices in the Kanto region have been low at JPY 50,000 to 51,000/t($311-318/t), and high-end varieties like HS scrap, from thick steel frames, and shindachi, leftover material from thin plate processing, are in high demand. Current prices for HS range from JPY 55,500 to 56,000/t ($346-349/t), and shindachi from JPY 55,000 to 55,500/t ($343-346/t).

Also, HS is sourced from demolitions of S-structure buildings, but delays in these projects have reduced its availability. Conversely, new cuts from the automotive sector are only gradually improving.

Market insiders noted that strong overseas demand, particularly from Korean steelmakers, has tightened the supply of high-end varieties. Korean buyers prefer HS over H2, intensifying the demand.

The market continues to monitor these trends closely, with expectations of increased demand for high-end scrap driven by China's resumption of steel scrap imports and blast furnace manufacturers' carbon neutrality goals.

Impact of JPY depreciation on scrap prices:

In Kanto region, steel scrap prices by electric arc furnace increased by JPY 500-1,500/t ($3-9/t) due to JPY depreciation.

Tokyo steel's Utsunomiya plant raised prices by JPY 1,000/t ($6/t) from 26 June. Meanwhile, other manufacturers limited the increase to JPY 500/t ($3/t) and some kept prices unchanged, leading to wait-and-see approach. In overseas, the steel scrap demand was also sluggish and weak due to increase in purchase prices of Utsunomiya.

Totetsu Utsunomiya's prices have been raised for the first time in a month and a half since May. The prices of H2 were assessed at JPY 51,000-52,500/t ($317-326/t), JPY depreciation is the main reason for the increase, as some of the plants have kept prices steady or lowered.

However, the Okayama and Kyushu Plants have kept their purchase prices unchanged, and the Kansai has lowered the purchase price by JPY 500/t ($3/t).

The Tahara Plant also raised prices by JPY 1,000/t ($6/t) on 26 June 2024 after resuming operations on 22 June 2024. Despite these changes, shippers in the Kanto area have not significantly responded, with Gulf prices remaining unchanged or raised by JPY 500/t ($3/t).

Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and BigMint.