Japanese scrap sees price drops in December

Japanese scrap sees price drops in December

Japanese steelmakers announced scrap procurement price cuts around Yen 500/mt ($4) this week as they reduced production due to low sales prices. Current H2 grade scrap prices in Japan are around Yen 23'000-23'500/mt ($90-95) in Japan. Tokyo Steel's purchase price for its Okoyama Works fell from Yen 27'000/mt ($224) on November 17 to Yen 26'000/mt ($216) today. There are two main reasons behind the decrease in prices: The first one is the fall in hot rolled coil prices in the fourth quarter, which has also led the Japanese steelmakers cut their production. Second, the supply of scrap increased as the scrap sellers wanted to sell as much as scrap as they can in December to cash in before the new year. However, the prices of ferrous scrap futures offered by Central Japan Commodity Exchange are relatively high and gaining strength. The settlement price of February 2006 dated ferrous scrap futures increased Yen 110 from yesterday to Yen 25'500/mt ($212). This indicates that current decrease in the prices does not affect the attitude for the scrap prices in 2006.