Japanese scrap price tumbles on weak demand

Japan's Tokyo Steel announced today that it will cut its domestic scrap collection prices on all grades tomorrow, the third such price cut within a week.

Prices at the Utsunomiya plant in the Kanto region and the Tahara plant in the Chubu region were lowered by ¥1,500/t ($14/t) and ¥1,000-1,500/t, respectively, while prices at other plants were reduced by ¥500/t.

Tokyo Steel has now lowered prices by a total of up to ¥2,500/t to Tahara and by ¥3,500/t to Utsunomiya, following earlier reductions this week. H2 scrap prices now stand at ¥20,500/t and ¥20,000/t delivered to Tahara and Utsunomiya, respectively.

Dockside prices at Tokyo Bay fell sharply at beginning of this week after Tokyo Steel made its second price adjustment of this week. But prices have since been stable, with exporters beginning to purchase scrap as overseas buying interest increases.

H2 fas Tokyo Bay prices were at ¥21,000-22,000/t today, down from ¥23,500-24,000/t at the end of last week. HS and shindachi prices were both at ¥23,500-24,000/t fas. Suppliers anticipate a further fall in dockside prices after Tokyo Steel's price reduction at Utsunomiya today, which is the largest this week.

The scrap market outlook across Japan varies, traders said. Scrap prices in the Kanto region have limited downside because many domestic suppliers had already delivered most of their stocks to mills and are now focused on collecting new material. But scrap availability in west Japan is significantly higher than demand as many mills in the region have halved output because of weak steel demand, which is likely to pressure scrap prices.

Japanese traders were more active on the seaborne market this week. They lowered offers for H1/H2 50:50 to $240-245/t cfr Taiwan to compete with US containerised scrap offers, while most Taiwanese mills refrained from buying because of high scrap inventories and weak domestic rebar demand.

South Korean and Vietnamese mills started to show interest this week. South Korean mills were heard to have bought shred from Japan at ¥27,000/t ($251.11/t) cfr earlier this week, which nets back to around ¥23,000/t fob for H2. Cargoes of H2 scrap were heard sold to south Vietnam at $243-245/t, while there were offers at $250-255/t.