TOKYO Japanese ferrous
scrap prices have hit their highest levels in well over a year,
but the increase could stall, market sources said.
The national average price of
H2-grade scrap (a mix of No. 1 and No. 2 heavy melt) stood at
¥33,436 ($354) per tonne this past week, up ¥811 ($9)
per tonne from the previous week and the most expensive level
since October 2011.
Domestic scrap prices have been
driven higher by several factors, including higher iron ore and
coking coal prices and a weak yen, which has fueled heavy
buying from South Korean mini-mills.
Data from the Korean trade
ministry shows that imports of Japanese scrap rose by around 26
percent in January and February compared with year-earlier
levels, while imports of scrap from Russia and the United
States plunged by about 50 percent in February.
That heavy interest has forced
Japanese scrap prices higher. The latest export tender held by
Tokyo-area scrap dealers earlier this month saw the average
winning bid for deliveries of H2-grade scrap for next month
rise by ¥1,337 ($14) per tonne to ¥34,915 ($369) per
tonne f.a.s. from the prior auction price, marking the highest
level in more than a year.
However, there are signs that
the rally in prices could be losing steam, with reports that
Hyundai Steel Co. Ltd. last week purchased two batches of
H2-grade scrap from Japan at ¥35,000 to ¥35,500 ($370
to $376) per tonne f.o.b., down ¥300 to ¥500 ($3 to $5)
per tonne from prior purchases.
Any fall in export prices will carry over to the domestic
scrap market, especially after Tokyo Steel Manufacturing Co.
Ltd. failed to raise its selling prices for next month. The
inability by the countrys largest electric-arc furnace
operator and effective benchmark price-setter to hike its
product prices means it will look to put as much of a lid as it
can on rising scrap prices.
A version of this article was first published by AMM sister
publication Steel First.