Tokyo Steel slashes scrap buying prices on export tender plunge
The reduction, Tokyo Steel's sixth so far this month, sees the H2 buying price at its Utsunomiya works north of Tokyo fall by Yen 1,500/t while H2 procurement prices at its other six bases nationwide are lower by Yen 1,000/t, according to a post on its website. Given that Tokyo Steel had clipped buying prices at Utsunomiya by Yen 500/t just 24-hours earlier, the mini-mill has now reduced its H2 prices by a huge Yen 10,500/tonne since July 13.
Moreover, the price of Yen 41,500/t that Tokyo Steel is paying dealers for scrap delivered to Utsunomiya is now the lowest in over 22 months, sources say.
On Wednesday, the auction called by the Kanto Tetsugen grouping of scrap dealers around Tokyo saw a parcel of 15,000 tonnes awarded to JFE Steel's trading arm, JFE Shoji, for a bid of Yen 42,720/t FAS, some Yen 5,236/t lower than the top bid in last month's tender, as Mysteel Global reported.
Domestic scrap prices have been steadily declining in recent weeks as the volumes of scrap arising have been steady while demand from mini-mills and blast furnace steelmakers has softened with the summer slowdown and mills halting melt shops and rolling mills for annual maintenance.
Despite the hefty month-on-month decline in Wednesday's winning price, Kanto Tetsugen chairman, Koji Minami, did not hide his relief at the result saying that he "highly valued" the company that won the bid. "Many people had predicted that the winning price would be around Yen 40,000-43,000/t and I'm relieved that the price was higher than what we had expected," Japanese media reports quote him as saying.
Asked about the near Yen 5,300/t-decline in the top price from the previous auction, Minami said that countries that were usually large buyers of Japanese scrap are these days receiving large quantities of low-priced China-origin billet which mini-mills and re-rollers were buying to make steel products to save money, rather than melt scrap and produce billets themselves. "I don't think that we have had a lot of offers (for scrap) from overseas buyers," Minami is quoted as saying.
The plunge in the scrap export price meant that Tokyo Steel had nothing to fear from scrap dealers and traders diverting scrap destined for its own yards to buyers abroad who might be offering more attractive prices. Consequently, it could confidently slash its own purchase prices, Mysteel Global notes.
Written by Russ McCulloch, russ.mcculloch@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com
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