With Japan's local ferrous scrap market continuing downward in the Kanto area, benchmark prices of No 2 HMS further slid there to JPY 23,000 per tonne delivered at steelworks as of October 9th 2012, with a low of JPY 22,500 per tonne and a high of JPY 23,500 per tonne.
In the Kanto area, Tokyo Steel Mfg Co reduced what the company pays for local ferrous scrap again by a uniform JPY 500 per tonne for all grades from October 6th 2012 at its Utsunomiya works. Most of the other electric steelmakers followed suit on the double. From October 6th 2012, a price reduction of JPY 500 per tonne for all grades took effect at the works of companies such as Asahi Industries Co, Itoh Iron & Steel Co, Kanto Steel Limited, Godo Steel Limited, JFE Bars & Shapes Corporation, Daisan Steel Co, Chiyoda Steel Co, Tokyo Tekko Co and Mukoyama Steel Works Co. From October 9th 2012, JFE Bars & Shapes Corporation held down what it pays by JPY 500 for all grades at its Misato works. In a separate move, Sanko Steel Co has lowered its purchase prices by JPY 500 per tonne this week to JPY 23,500 per tonne delivered for No2 HMS at its Hiratsuka works. In contrast, Jonan Steel Corporation held back on any price reduction of local ferrous scrap from October 6th 2012. At Jonan Steel's Kawaguchi works, the delivered price of No 2 HMS was unchanged at JPY 23,000 per tonne as of October 9th 2012.
As a result, the benchmark of No2 HMS prices further declined to JPY 23,000 per tonne delivered at steelworks as of October 9th 2012 in the Kanto area when a low of them stood at JPY 22,500 per tonne and a high of them at JPY 23,500 per tonne.
At first, there was a view in market sources that a decline in the Kanto market would slacken last week. As a matter of fact, the decline accelerated in the wake of Tokyo Steel's purchase price reduction twice last week. In this connection, arrivals of local ferrous scrap are continuing to equal an average 100% of consumption levels at the works of various electric steelmakers operating in the Kanto area, according to ferrous scrap distributors.
Some ferrous scrap distributors expect downward pressure to begin weakening on the Kanto market this week. Behind the expectation are ship loadings scheduled this week for export cargoes from the Kanto Tetsugen cooperative association of ferrous scrap dealers. On the contrary, other ferrous scrap distributors admit that upswing factors are difficult to find in Kanto market conditions. Under the present circumstances, there is a strong feeling among market participants that the Kanto market will continue its downswing for the present. Besides, there are no voices of any bullish view from ferrous scrap dealers as they have no option but to continue a system each of prompt deliveries after processing to meet each arrival of material at their yards.
In the Tokyo Bay area, too, a fall of JPY 500 per tonne on average took hold in FAS prices of local ferrous scrap on last weekend. As of October 9th 2012, benchmark FAS prices further slid to JPY 22,000 to JPY 22,500 per tonne for No2 HMS. At the same time, they further declined to JPY 24,500 to JPY 25,000 per tonne for P&S steel scrap and JPY 25,500 per tonne or so for Shindachi (high grade material).
It is likely that the ship loading volume of ferrous scrap cargoes in the Tokyo Bay area will increase this week from the level of last week despite less working days than usual this week after consecutive holidays of October 6th 2012 to October 8th 2012. Kanto Tetsugen is slated to have its export cargoes ship loaded, too, this week. As a result, some trading companies are reacting with expectations that FAS prices could turn to resisting a further decline.
Source - TEX Report Limited
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