Japan Iron & Steel Recycling Institute (JISRI) said that the Japanese ferrous scrap market, especially H2 (#2 HMS), would continue to be weak in August amid soft global cues. JISRI anticipates a supply surplus of ferrous scrap due to potential summer production cuts that could pressure ferrous scrap prices. Also, new waves of COVID-19 and slow domestic steel demand could further soften the outlook for Japanese scrap consumption in the near terms, forecasts JISRI.
In July, domestic ferrous scrap prices entered a correction phase and fell by JPY500-1,500/mt ($4.58-$13.74/mt), mainly in eastern Japan and the Chubu region. In Kansai, prices for the H2 scrap dropped below JPY50,000/mt in end-July from JPY50,500-51,500/mt early July. H2 scrap prices in Kanto fell to JPY48,500-49,500/mt, and the East versus West region price gap started to widen noticeably.
Buyer’s expectations from the seaborne markets dropped to as low as JPY47,000/mt fob Japan for H2 grade this week with the sharp resurgence of new COVID infections in the East Asian markets, including Japan, and a $30/mt drop in Turkish bulk prices over July month.
High grades supply tight
On the other hand, high and premium grades of ferrous scrap are still in strong demand both in Japan and the overseas markets. Consequently, prices remain firm for these grades in comparison to the H2 prices. The export prices of the new cuts and HS (#1 busheling and P&S equivalent) remained firm at JPY64,000-65,000/mt fob, and the price difference from H2 has expanded to above JPY15,000-18,000/mt ($138-165/mt).
| Average price/mt in July 2021 | |||
|---|---|---|---|
| JPY/mt | $/mt | Change MoM (JPY) | |
| Foreign-shaped steel bars | 87,300 | $800 | ＋3,300 |
| H-shaped steel | 96,300 | $883 | ＋3,600 |
| Fe scrap | 47,000 | $431 | ＋400 |
Source: Japan Iron and Steel Federation (Average prices in Tokyo, Chubu and Kansai regions) | |||
| Region wise – H2 grade manufacturer’s pre-furnace/purchase prices | ||
|---|---|---|
| Early-July | End-July | |
| Hokkaido | 46.0～47.0 | 45.5～46.5 |
| Northeast | 47.0～48.0 | 47.0～48.0 |
| Niigata | 46.5～47.5 | 46.5～47.5 |
| Kanto | 49.0～50.0 | 48.5～49.5 |
| Center | 50.5～51.5 | 49.0～50.0 |
| Kansai | 50.0～51.5 | 50.5～51.5 |
| Himeji | 50.0～51.5 | 50.0～51.0 |
| Middle and Shikoku | 51.0 Ce | 50.5 Center |
| Kyushu | 50.0 Center | 49.0 Center |
| (Unit: JPY1,000) Source: Nikkan City News Agency | ||
| Production and inventory (June 2021) | ||
|---|---|---|
| Volume | Change MoM | |
| Crude steel production | 8,108 | －314 |
| (Electric furnaces) | 2,104 | ＋14 |
| Manufacturer Scrap Stock | 2,899 | －277 |
| Small bar production | 688 | ＋58 |
| (Unit: 1,000mt, manufacturer scrap stock figures for May 2021) | ||
| Source: Japan Iron and Steel Federation | ||
($1=JPY109.2)