Tokyo Steel halts scrap deliveries to Utsunomiya

Tokyo Steel has halted intake of scrap to its Utsunomiya plant amid a free-fall in scrap prices.

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The company said it was suspending deliveries to the plant, located north of Tokyo, as well as slashing its purchase prices by a further ¥1,000 ($10) per tonne for H2 grade deliveries to its Okayama, Kyushu, and Tahara production units as well as those to its Takamatsu service centre, effective from March 6th deliveries.

Japan’s largest electric arc furnace operator and de-facto benchmark price-setter did not say when deliveries to Utsunomiya would resume.

The company has now reduced its delivery charges four times since the weekend, having yesterday slashed delivery charges to Utsunomiya by ¥1,000 ($10) per tonne to ¥32,000 ($312) per tonne.

The latest price reduction has taken new delivery prices for both seaborne and overland deliveries to its Kyushu works to ¥34,500 ($337) per tonne; those to Tahara and Okayama to ¥33,000 ($322) per tonne; and those to the Takamatsu service centre to ¥32,000 ($312) per tonne.

The drop in scrap prices to their lowest levels in more than six months has been attributed to a large increase in supply that isn’t being matched by current demand levels.

The big fall in export prices since the beginning of the year has also contributed to the situation.

Since the start of the year, Tokyo Steel has slashed its prices 12 times and is paying ¥6,000 ($59) per tonne – or almost 16% – less for its deliveries.