Tokyo 24 January 2011 04:40
Tokyo Steel has raised its ferrous scrap purchase prices for the second time in little more than a week.
The mill paid ¥500 ($6) more for scrap delivered to its five EAF works across Japan, as rising scrap prices on the seaborne market force domestic buyers to pay more.
Other EAF operators in Japan followed suit. “As long as export prices for scrap continue to rise, we have no option but to raise our prices”, said an official at one steelmaker. Scrap prices in Asia have risen sharply in recent months, putting mills under pressure to raise steel prices. At the latest export tender held by Tokyo-area dealers, Japanese ferrous scrap export prices hit ¥38,601 per tonne for H2 grade for February shipments. The price marked a ¥5,400 per tonne hike on the previous month's tender and a ¥1,000-2,000 per tonne premium over domestic purchase prices. But Japan's EAF manufacturers are particularly squeezed because their markets — especially the key construction sector — are still posting languid growth, with bleak prospects for the coming year.
Tokyo Steel has warned it expects to post a ¥1 billion operating loss for the fiscal year ending March 31, as opposed to ¥8 billion operating forecast earlier. Now warning that it expects to post a Y1bn operating loss for the fiscal year ending March 31 as opposed to an Y8bn operating profit forecast earlier. In the October-December period, the company saw its selling prices for H-beams fall by ¥5,000 per tonne from ¥72,000 to ¥67,000 per tonne, while its scrap costs rose by ¥6,000 per tonne.
Japanese demand for rebar is expected to stand at around 7.4-7.5 million tonnes, according to Hideichiro Takashima, chairman of Kyoei Steel, almost unchanged from demand for the current year.
Tokyo Steel said it will pay ¥38,000 per tonne for no.2 HMS scrap delivered to its Okayama works; ¥37,500 per tonne for Kyushu; ¥36,000 to Takamatsu; ¥38,000 to Utsonomiya, and ¥37,000 for seaborne shipments to Tahara, and ¥38,000 for overland arrivals to Utsonimiya. Other EAF operators have followed Tokyo Steel, with domestic prices last week in the ¥36,500-38,000 per tonne range, up ¥500-1,000 on the previous week.
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