TOKYO Japanese scrap
prices have jumped for a third consecutive month in the latest
export auction on the back of rebounding demand, although some
question whether the gains can be sustained.
Tokyo-area scrap dealers
highest winning bid for February deliveries of H2-grade scrap
(a mix of No. 1 and No. 2 heavy melt) was 32,850 yen ($367.63)
per tonne f.a.s., up 23 percent from the prior level.
Participants successfully bid for more than 20,000 tonnes.
This means that Japanese export
prices for scrap have risen about 45 percent in the past three
months, now standing at their highest level in seven
The strong interest in the
auction has come as little surprise. Export prices to South
Korea have been gradually rising as the countrys mills
take advantage of the strong won and the falling yen, which
together make Japanese scrap relatively cheaper to
Also buoying prices is robust
regional demand for imported scrap, particularly from China and
Taiwan, where mills are looking to fill inventories before the
Lunar New Year holiday next month.
However, some have been
surprised by the size of the jump, given that prices are now
about 2,000 yen ($22.40) per tonne higher than the most recent
export contracts concluded between Japanese traders and Korean
The big jump in prices at the
tender has forced Tokyo Steel Manufacturing Co. Ltd., Tokyo, to
raise its scrap purchasing prices to the highest level seen
since last May, despite only last week protesting that charges
are too high given current domestic selling prices.
As of Feb. 17, the company is
now paying 30,500 yen ($341.50) per tonne for all deliveries to
its Utsunomiya Works; 30,000 yen ($335.87) per tonne for those
to its Okayama, Kyushu and Tahara plants; and 29,000 yen
($324.69) per tonne for those to its Takamatsu facility.
Thats up 500 to 1,000 yen ($5.60 to $11.19) per tonne
from previous price levels.
But some traders are beginning
to question whether export prices can keep rising, arguing that
Japanese scrap prices have shot up too rapidly and inquiries
from Korean mills appear to be waning.
Nevertheless, scrap traders appear to be taking an
aggressive stance, and some traders say that both domestic and
export prices could still rise a bit furtheralthough they
add that they wouldnt be surprised if prices subsequently
eased in the coming weeks.
A version of this article
was first published by AMM sister publication Steel