In order to cope with a sharp fall of nickel price, stainless steel companies of Japan have aimed to reduce price of nickel based stainless steel scrap to be purchased from domestic sources by JPY 30,000 per tonne in total in the second half of September 2008.

A reduction of JPY 20,000 per tonne has been already implemented from the September 17th 2008 and new price of this scrap to be paid by mills has come to JPY 220,000 per metric ton delivered to mills. In addition, stainless steel mills have planned to reduce price of nickel-based stainless steel scrap by JPY 10,000 per tonne from the beginning of this week.

However, reflecting a depression of economic activities, the quantity of nickel based stainless steel scrap to be generated from domestic sources has still continued on a low level and, accordingly, the supply situation has maintained tightness. A possibility of whether the price of JPY 210,000 per tonne delivered to mills as intended by mills to materialize is able to be followed by the reality of this market or not is depending on how to actually move price of nickel-based stainless steel scrap in Japan.

The output of stainless steel at the Hikari Works of Nippon Steel in August 2008 recorded the highest one and this high production is being followed in September. However, stainless steel mills of Japan will be able to maintain their production on a high level by September but are scheduled to turn to decrease their production by 10% from October. The Kawasaki Works of Nippon Yakin Kogyo has already suspended from this week to receive cargoes of stainless steel scrap.

Therefore, the circumstances surrounding stainless steel scrap are thought to soften but, by taking into consideration of the realities in China, a possibility to revive exports of stainless steel scrap from Japan to China will be seen and some of the parties concerned are marked of this aspect. The matter to decrease production of nickel contained pig iron in China is progressing and there is a view in the market that the demand for nickel based stainless steel scrap as the substitutive material for nickel contained pig iron is anticipated to go to an upswing.