Tokyo Steel cuts local scrap prices for third time in a row

The major EAF-based steel producer in Japan, Tokyo Steel, continues to adjust its local scrap procurement prices downwards. The gradual decrease started last week with two separate price reductions, with the third decrease announced today, September 28. The reduction today was JPY 500-1,000/mt, depending on the plant, except for Kyushu where prices have been kept stable for now. Japanese scrap prices are softening as buyers in Japan’s scrap export markets continue to exert pressure on prices. While lower scrap prices from Japan started to attract some attention in the export markets, the local prices have also been impacted.

Tokyo Steel’s general range for H2 grade scrap is now at JPY 47,000-50,500/mt ($325-349/mt) depending on the mill, decreasing by $7/mt on the lower end and by $4/mt on the upper end due to the fluctuation of the Japanese yen-US dollar exchange rate. The Kyushu plant alone now represents the higher end of prices, with the lowest prices still at the Takamatsu plant.

Tokyo Steel’s general range for shindachi scrap is currently at JPY 49,000-52,500/mt ($338-363/mt). Dollar-based prices have decreased by $8/mt on the lower end and by $4/mt on the upper end. All prices in question are delivered and effective as of September 29. Exchange rate fluctuations are taken into consideration when calculating the dollar-based price changes.

The US Federal Reserve’s increase of interest rates has continued to negatively impact the strength of the Japanese yen as the Bank of Japan (BoJ) maintains its loose monetary policy. However, Japan also intervened late last week and bought its own local currency for the first time since the Asian crisis in 1998. The move came when the Japanese yen was approaching the rate of JPY 146 to the US dollar. According to Reuters, “BOJ governor Haruhiko Kuroda brushed aside the chance of a near-term policy tightening, saying he had ‘absolutely no plan’ to raise interest rates.”

$1 = JPY 144.65