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Japan's steel scrap prices soar
OSAKA -- Trading prices for steel scrap, conventionally used as feedstock for electric arc furnaces, have climbed more than 30% in the past two months.
The price has risen to around 26,500 yen ($226) a ton in greater Tokyo, the highest in about a year and a half. A similar upturn in the Osaka area sent scrap to 25,000 yen a ton in mid-December, up 6,000 yen from a low in late October. Some operators of electric arc furnaces must pay 1,000 yen to 2,000 yen above the going rate to ensure sufficient supplies of steel scrap for their planned production, said an official at a processing company in greater Osaka.
They consumed 900,000 tons of scrap during the converter process in October, the most in nearly two and a half years. Nippon Steel & Sumitomo Metal's Oita works in the Kyushu region cannot secure enough steel scrap locally, apparently bringing in additional scrap from the Tokyo area by sea.
Steel prices in China have rebounded amid higher costs for raw materials and growing hopes for infrastructure spending by Beijing. This has lifted the cost of semifinished steel, or billets, in Asia to around $450 a ton -- up 70% from spring. As a result, steelmakers in Southeast Asia are avoiding billets and instead buying Japanese scrap, which has become more affordable amid the yen's decline against the greenback.
Steel scrap's price gains raise the prospect of steelmakers passing the increases on to customers. Tokyo Steel Manufacturing announced price hikes for its steel materials Monday. But whether such moves will gain momentum is uncertain. Demand for steel sheet remains firm among automakers, but reinforcing steel, used mainly for apartment buildings, faces soft demand.
