Tokyo Steel raises scrap price as supply stays tight

Tokyo Steel raised scrap purchase prices for most of its works for the first time in three weeks as domestic availability remains tight.

The price rise defied gathering expectation of a pull-back in scrap prices across Asia, and follows the first fall in Japanese scrap export tenders in four months.

Japan's biggest EAF-based producer and scrap price-setter left purchase prices for its main Utsunomiya works unchanged, but increased prices for seaborne deliveries to its Okayama works by ¥1,000 ($12) per tonne, and all other deliveries by ¥500 per tonne.

“Scrap supplies are quite tight and export demand still quite strong, which will probably stop scrap prices from falling sharply," one trader said.

Scrap prices in Japan have risen by more than a third in the last few months, as Tokyo Steel and others try to keep pace with regional price rises. 

The new delivered price of H2 grade scrap delivered be sea to Tokyo Steel's Okayama works is ¥39,500 per tonne, with land arrivals at ¥39,000. 

All shipments to Kyushu are at ¥38,500, and deliveries to Takamatsu are at ¥37,000 per tonne. Seaborne arrivals at Tahara are at ¥38,000 and land shipments are at ¥38,500. The company's Utsonomiya works will pay ¥38,000.

The latest export tender held by Tokyo area dealers earlier this month saw the average winning bid for March shipments of H2 scrap drop by
¥615 to FAS ¥37,986 per tonne, the first retreat in prices since October.

Also likely to support scrap prices are efforts by mills to push through higher domestic prices for such products as H-beams amid rising regional prices, which will give scrap suppliers excuse to hold or even raise their prices, even though actual domestic steel demand remains relatively weak, say traders.