Tokyo Steel scrap prices push export values higher

Price increases for domestic ferrous scrap by Japan's largest electric arc furnace steel mill pushed export prices higher than what most buyers in the region could accept this week.

Tokyo Steel announced today its third increase for scrap prices this week, effective from tomorrow.

The latest price adjustments increases collection prices by ¥1,000/t ($9.15/t) to Kyushu and Utsunomiya plants and by ¥500/t to all other plants for all scrap grades. H2 scrap is priced at ¥21,500/t delivered to Tahara and Utsunomiya plants, up by ¥2,000/t for Tahara plant and by ¥2,500/t for Utsunomiya plant this week.

Tokyo Steel is raising collection prices to narrow the price gap between domestic and export values. Inbound scrap flows have been slow, and the steel producer's low inventories have left it with no other choice but to increase prices to compete with exports. But export suppliers are taking the opportunity to follow the increase by pushing dockside prices up further, a Japanese trader said.

The fas Tokyo Bay H2 price kept its upwards trend for this week by rising to a midpoint of ¥25,000/t from ¥23,000/t at end of last week. Prices for HS and Shindachi are ¥26,000-26,500/t and ¥25,500-26,500/t respectively.

The H2 price has increased faster than other higher grade scrap. The gap between H2 and HS shrank to ¥1,000-1,500/t. Some trading firms lacking in tonnages are in a rush to fulfil H2 contracts before vessels arrive soon, pushing H2 dockside prices higher.

There were fewer Japanese export offers this week as most suppliers would rather wait until the next Kanto tender on 10 June. Many market participants expect the tender result will go up to around ¥25,000 or higher for H2 grade.

The fas Tokyo Bay price is too high to conclude any export deals to ship from the Kanto area. Trading firms need at least ¥25,500-26,000/t fob for H2 to cover all costs. Indicative prices from South Korean buyers are still lower than ¥25,000/t fob for H2. Even though some Vietnamese buyers can pay around ¥25,500/t fob for H2, most suppliers were unwilling to negotiate prices this week. More Vietnamese steel mills turned to buy domestic billet to save costs.

The Japanese domestic SD295A rebar price was unchanged at ¥55,000/t.

By Xia Ji