Strong Q4 steel prices to support Japan scrap market, Jisri says

Rising steel prices over the coming months are likely to prop up prices for ferrous scrap in Japan, the Japan Iron and Steel Recycling Institute (Jisri) said on Thursday October 1.

“Japan is entering the ‘autumn of price increases’ in which product prices at both blast furnaces (BFs) and electric-arc furnaces (EAFs) are being raised one after another,” Jisri said.

“The domestic steel scrap market is showing a mixture of caution and high expectations,” the association said.

Despite a recent drop in Japanese export scrap prices, key scrap buyer mill Tokyo Steel has held its buying price since its last purchase price increase on September 15. The steelmaker says that it is paying ¥26,000 ($246) per tonne for H2 at its Utsunomiya works.

Tokyo Steel raised its listed sales prices for several varieties of steel plate - and for deformed steel bar - by ¥2,000 per tonne month on month in September.

On September 15, the mill predicted further steel price increases ahead, noting that construction project demand is on the rise for the coming months and buyers’ steel inventory is at “an extremely low level,” it said.

Japan’s crude steel output has started to recover after a poor start to the year, hitting 6.45 million tonnes in August 2020, up 6.63% month on month, according to the Japan Iron and Steel Federation (JISF).

In contrast to the strong Japanese local market, Jisri said it recognizes the growing bearishness in foreign steel and scrap markets.

“Iron ore prices and steel prices in China have shown signs of correction from their high prices and we’re beginning to see that the international steel scrap market has entered an adjustment phase,” the association said.

Lower demand from South Korea and Taiwan led to Japanese bulk H2 prices dropping by more than $20 per tonne over the last three weeks.

Fastmarkets’ price assessment for steel scrap H2, export, fob main port Japan was ¥27,000-28,000 ($256-265) per tonne on Wednesday September 30, widening downward by ¥500 per tonne from ¥27,500-28,000 per tonne fob one week earlier.

But market sources have told Fastmarkets they believe prices have stopped declining and the Japan export scrap market may now have hit a bottom.

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