Japan's Tokyo Steel raises scrap buying prices

21 May 2015

Japan's leading electric steel producer Tokyo Steel Manufacturing, has increased its buying prices for all grades of ferrous scrap delivered to all its works by Yen 500/mt ($4.10/mt) effective Wednesday, the company announced on its website late Tuesday.

The increase takes Tokyo Steel's price for H2 grade material delivered to its Utsunomiya works north of Tokyo to Yen 26,000/mt ($214.90/mt), according to its website.

H2 delivered to its Tahara works in central Japan and to its Okayama works in western Japan now fetches Yen 25,000/mt and Yen 24,000/mt, while that delivered to its Kyushu works in western Japan and Takamatsu Steel Center will command Yen 24,500/mt and Yen 23,500/mt, respectively.

The change is the mini-mill's first since April 21 when it raised buying prices for all grades at Utsunomiya and for turnings grade delivered to its Takamatsu Steel Center.

Tokyo Steel procurement officials were unavailable for the comment Wednesday, but a Tokyo-based scrap trader expressed surprise at the mini-mill's decision.

"Some mini-mills in northern Japan, such as JFE Bars & Shapes and Itoh Iron & Steel, cut their scrap buying prices by Yen 500/mt from Monday claiming that they had sufficient stocks. So I wonder why Tokyo Steel raised its buying prices," he said.

He added that as of Wednesday, other Japanese mini-mills had yet to follow Tokyo Steel's lead and seemed to be just standing on the sideline, monitoring price movements.

Another Tokyo-based scrap trader said Tokyo Steel's increase seems to reflect rises in export prices of Japanese scrap.

"The latest bookings for Japanese scrap by South Korean mills show an increase (so) Tokyo Steel might want to stop deliveries of scrap to the bay area for export," he said.

The trader was referring to the established practice of scrap collectors delivering their material to ports around Tokyo Bay for export if mills abroad are paying more than domestic steel makers.

South Korean steelmaker Dongkuk Steel Mill booked Japanese H2 grade scrap at Yen 25,500/mt on a FOB basis last Thursday, an increase of Yen 300/mt from its booking made two weeks earlier, a trader in Seoul said.

Hyundai Steel's latest booking for Japanese H2 scrap, which it placed on Monday, was concluded at Yen 25,000/mt FOB, South Korean trade sources confirmed, unchanged from the mini-mill's previous booking for Japanese material made during the last week of April.

But Hyundai was also offering Japanese exporters a higher price of Yen 25,500/mt FOB for those promising cargoes of 4,000 mt and above, the first Japanese trader said.

Japanese traders are currently paying scrap collectors Yen 25,000/mt free alongside ship for H2 material for export, up Yen 500/mt from a week ago, the Japanese traders confirmed.

The traders are currently targeting a minimum of Yen 26,000/mt FOB for H2 export contracts through Tokyo Bay, sources confirmed.