TOKYO Tokyo Steel Manufacturing Co. Ltd. has raised the scrap purchasing price at one of its plants by 1,000 yen ($12.50) per tonne, suggesting that Japanese scrap prices might finally have bottomed out after falling to multiyear lows over the past few months.
Although the increase only affects deliveries to the companys Utsunomiya plant north of Tokyo, it is the steelmakers first scrap price increase since late August.
Since then, Japans largest electric-arc furnace operator and effective benchmark price setter has slashed its buying prices by 7,000 yen ($88) per tonne, taking tags to the lowest levels in more than three years (amm.com, Oct. 26).
The 1,000-yen-per-tonne increase raises the steelmakers scrap purchase price at its Utsunomiya Works to 23,500 yen ($295) per tonne. Purchase prices for deliveries to its other four works continue to range between 21,500 and 22,500 yen ($270 to $282) per tonne.
Market observers told AMM sister publication Steel First that while scrap prices remain subdued in the western part of the country, those in the Tokyo area recently received some upward pressure as mini-mills in the countrys east ramped up steel output.
The regions 18 EF operators are expected to increase production to 439,000 tonnes this month, up almost 3 percent from October, which is expected to drive a 5.5-percent rise in scrap purchases.
The rise in scrap prices wont be welcomed by Tokyo Steel, which is facing sluggish demand that is preventing it from increasing its selling prices.
Last month, the company warned that it would post a 15-billion-yen ($188.36-million) operating loss in its fiscal year ending March 31, 2013, on the back of a 16.7-percent decline in sales revenue.
A version of this article was first published by AMM sister publication Steel First.