The current state of domestic stainless steel scrap market~ A momentary bullish atmosphere ~

                                         IRUNIV 2013/07/23

image 300 series stainless steel scrap markets in Japan are in bullish atmosphere. It is similar to other non-ferrous metallic scrap markets, but LME nickel market does not serve as an index, and a local tightness and a local steep price rising are supporting the market. However, to the end it is considered as a temporary phenomenon, and we estimate that the future of LME nickel price will be bearish due to the abundance of the stock. Like the end of the sparkler fireworks, now it is swelling noisily (high prices are flying in a part), but the fire goes out unexpectedly early.

Changes in market prices and stock of LME nickel

 LME nickel market price is USD13,535/ton based on cash settlement, and the stock is increased to 196,074 tons (each as of today 16th) which it becomes the most quantity in history. Also according to the statistics of International Nickel Study Group (INSG), we consider the supply and demand of nickel itself will be low where it’s becoming surplus of 12,000 tons in May.

The buying price of 304 series scrap of Aichi Steel is 150 yen!
 Besides, the demand for the all-important 300 series stainless steel products is dull again. Merely because it is said that the round‐bar stainless steel is moving, we consider this case might be reflected in the abnormal high price buying of special steel producers, including Aichi Steel. It is reported that the buying price of 304 series Solid of Aichi Steel is '140-148 yen/kg and sometimes nearly 150 yen/kg' (source from related companies), so we've thought that the spots seem to gather even not to give high prices up to here. The company is surely first-rate in Japan and it is showing a No.1 high price in Asia. If it be American scrap dealers, they would have shouted "AMAZING!".
 Unlike the special steel producers with a good business performance, the buying price of 304 series scrap of stainless flat steel producers including domestic NSSC is around 130 yen/kg. When it is 135 yen/kg, it's of "comparatively expensive" level. In the standard that the sale price of 304 series thin flat steel is 250-260 yen in real prices and the situation that the products are unsold, it is common to reduce the cost burden on scrap as possible. Is this case the difference between special steel producers which are making selling products, and either flat steel producers which always approach the resistance or raw materials suppliers?
steinlessmaker On the other hand, when we pay more attention to export market, Taiwanese product is about USD1250/ton based on CIF price, and this is the same as Chinese market. Chinese 304Solid is about RMB9300/ton (*USD1260/ton, not including tax). If we look at the circumstances this far, Chinese and Taiwanese market are leading, followed by Japan and Korea afterwards. Korea has been doing ahead‐of‐scheduled production within July before a great decrease in posco production (electricity shortage) in August, and even pushing the first vendor in Korea. But it is said that because in Korea the high quality 304Solid does not easily gather, Korea is putting its price on Japanese market. It is USD1350 - 1360/ton based on CIF price and JPY135 - 136/kg in yen value. Merely we heard that POSCO has been showing the dealer company Y for PSS (PoscoSpecialSteel) in Kawasaki (Kanagawa Prefecture) that "summer special price = 135 yen", and the spots are gathering.

Reactionary drop and sharp drop need to be noticed
 However, the buying of POSCO is also thought to be by the end of July. As a producer in pursuit of profit, it is hard to consider that the buying of Aichi Steel also continues a 150 yen until August. In other words, we consider that the current high price will not continue so for a long time, so as the short summer memory. Whoever will misunderstand the 'forever bull' when all turns around well as it is quite often in the stainless steel scrap market. When some screw of it came off, the market would collapse immediately, and market price would made a sharp drop, the shipment of spots would be cancelled. There should be once or twice that the industrial sectors have ever experienced a double punch.
(IRUNIV Susan)

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