Secondary grade stainless steel market: Traders coping with gap between Japanese and overseas markets
The market price of Japanese secondary grade stainless steel generating at stainless coil centers is always at a relatively high level due to the high number of traders for low generation as well as the stable price of primary grade stainless steel keeping 300-320JPY/kg for the past two years.
However, a trader dealing with 400-500 tons of secondary grade stainless steel per month says, gAs I fully understand that the supply of secondary grade stainless steel is tight with a low generation, but itfs getting so harder to do business due to a big gap between domestic markets and overseas markets.h
As to the secondary grade stainless steel, for example, 304 sheets used to be quoted at the price of 304 scrap plus something extra. Not only more traders have dealt with secondary grade stainless steel (the number of traders is not reducing), but also there is a notable change in coil centersf attitude. They have started to think much of secondary grade stainless steel including over-rolled and off-cuts as a part of source of earnings. As a result, their quoted prices by coil centers have risen year by year.
The prices of secondary grade stainless steel in overseas markets are changing day by day reflecting nickel price. But, they are said to be slow to react to a nickel price rise partly because of the recent low prices of primary grade stainless steel. While more primary cold-rolled steel sheets, which are mostly cheaper products, are traded at $2,000-2,050/t in Asian markets, secondary grade stainless steel remains around $1,700/t as of 20 May, 2015.
Another trader complains, gThere are various reasons such as product prices keeping at high level, rising scrap prices and weak yen for the high price of secondary grade stainless steel. But, overseas consumers complain that Japanese secondary grade stainless steel is expensive, too expensive compared to the prices in overseas markets.h
Japanese secondary stainless steel is said to be low in being purchased in domestic markets and to be expensive in being sold to overseas markets. Stockists and Traders dealing with secondary grade stainless steel are coping with the gap.
It is true that Japanese domestic secondary grade stainless steel price is maintained at a certain market level by the efforts of the entire industry. However, the main markets for secondary grade stainless steel are overseas. The prices in overseas markets are quite different from those in domestic markets, so it is necessary to increase purchases from overseas markets. Some stockists and traders want to sell secondary grade stainless steel to overseas markets at a profitable price. But, here, other traders always offer high prices. As a result, purchasing price doesnft drop. That sort of situation has continued for the past several years.
The foregoing trader says, gConstantly, purchasing price is high and selling price is low. In addition, generation of secondary grade stainless steel has recently lowered due to decrease in domestic process. The competition for access to secondary grade stainless steel will continue for a while. But, if we continue to push ourselves hard, our business will go bankrupt. We would like to maintain appropriate prices without purchasing products at higher prices as much as possible.h