TOKYO — Japanese ferrous scrap prices appear to be taking a breather after their recent climb as mini-mills complete their restocking.

The national average price for H2 scrap (a mix of No. 1 and No. 2 heavy melt) stood at 23,926 yen ($291) per tonne at the end of last week, up 6 percent from the previous week.

"Scrap (purchase prices) have gone up by quite a lot in recent weeks. This was partly because scrap prices had been seen as having reached unsustainably low levels, but more recently due to heavy buying ahead of last week’s public holiday," one market participant told AMM sister publication Steel First. He added, however, that he expects prices to remain stable for a short period as the market reassesses conditions before a possible downside correction.

Tokyo Steel Manufacturing Co. Ltd., Japan’s largest electric-arc furnace (EF) operator, has left its purchase prices unchanged since Nov. 20 (amm.com, Nov. 21).

Japan’s EF operators tend to ramp up output at weekends and on public holidays to take advantage of lower electricity rates.

The country’s mini-mills already face some of the highest power rates in the world. Nearly all of the country’s nuclear power plants were shut down in the wake of the earthquake and tsunami in March last year, and now mills face the prospect of still-higher electricity charges going forward as utilities fight to offset higher generating costs.

The head of the Japan Iron and Steel Federation warned last week that the domestic steel industry faces as much as 100 billion yen ($1.22 billion) in added costs if the power tariff increases being considered by five of the country’s utilities are pushed through.

The recent rally in scrap prices also has been fueled by a sharp rise in export prices, which early last week rose to about 27,000 yen ($328) per tonne f.o.b. on deals to South Korea. 

A version of this article was first published by AMM sister publication Steel First.