SUS Stainless Scrap Market Updates: 304 grade keep high price, 400 grade supply and demand balanced
2015/06/22At the Japanese domestic stainless steel scrap market in the mid-June, SUS304 grade stainless scrap keep a high price due to decreased flow into the market and SUS400 grade stainless scrap supply and demand trends has been changing from to be in surplus last year to be balanced due to increased export this year.
The current market price of SUS304 grade prompt scrap stays at JPY150-155/kg and that of SUS403 and SUS430 mixed scrap (common in central Japan) stays at JPY37-38/kg. Some of scraps only consisting of SUS430 grade purchased by specialty steel manufacturers under long-term contracts stay at around JPY45/kg. The surplus of mixed scrap of SUS403 grade (13Cr) which generally has a high availability and SUS430 grade (18Cr) has been absorbed by increased exports to Taiwan and Thailand. Supply and demand has already been so tight that specialty steel manufacturers have difficulty in purchasing of scrap only consisting of SUS430 grade.
(SUS400 grade scrap exported to Thailand increased to 1,216 tons in March and to 1,701 tons in April. The export to Taiwan is around 2,000t/m.)
SUS400 grade scrap, which had been locked in a downward spiral of typical “no price tag on surplus” till last year, has been fought over, though not to the extent of SUS304 grade.
An experienced distributor commented on SUS400 grade scrap with care and suggestion, “Nonetheless, the prices of SUS400 grade scrap are not leveled out. The prices completely depend on region, amount and supplier. As the first hint, the purchasing prices are different between the suppliers who can export and those who sell the materials only to domestic manufacturers. It’s impossible to say which purchasing price is higher. As the second hint, the former has more flexibility at the moment”.
As mentioned above, the SUS304 grade scrap market prices stay at JPY150-155/kg while nominal prices of manufacturers are said to be JPY145/kg in NSSC and JPY150/kg in a specialty steel manufacturer in central Japan. But, some of spot higher prices are close to JYP160/kg (including freight allowance) in the market. Higher prices of JPY155-158/kg can be seen in the largest exporter to Korea, S Company.
Given that June SABOT export price for Taiwan and Korea stayed at $1,350-1,370/t (July SABOT export price is yet to be determined.), domestic manufacturers’ current price of JPY160/kg, which is still limited.
NISSHIN STEEL has not yet rise their price adhering strictly to their own ideas. So, they can’t gather enough scrap, but the company accepts such a situation. Their basic stance is not to limit the amount of scrap nor raise their purchasing price.
In that sense, Nippon Yakin Kogyo in eastern Japan cares about dealers compared to NISSHIN STEEL which frustrates dealers. The company has produced 30,000 tons ahead of schedule in June to cope with the high power cost in July and in August (but 30,000t/m was normal monthly capacity level until just five years ago), so their demand for scrap has been increasing (partly because of decreased supply of their own ferronickel). But, the production will decrease to 20,000 tons in July and in August. With that background, most participants consider that the supply and demand will soften in Kanto region and the price will settle in summer.
In the domestic SUS304 grade scrap market, the prices are considered not to drop so much from the current level as the following reasons.
1. Most dealers don’t want to sell at less than JPY150/kg as they have stocks purchased at more than JPY170/kg in January and February.
2. The export price is expected not to go down so much as the global stainless scrap supply is tight.
3. As the depreciation of yen has led to decreased scrap import, purchasing prices of domestic scrap are expected not to drop.
4. LME Nickel price keeps stable at around $13,000.
Meanwhile, the demand for key stainless steel materials has continued to be weak. If the weak demand for stainless steel sheet deepened, manufacturers mainly producing stainless steel sheets would have to reduce production. But, production cutback can be cut both ways with causing fixed expenses growth.
If they continued full production, product price would drop relatively in domestic and international market causing declining profit margins. Japanese domestic stainless steel manufacturers currently are in a tough situation in either case.
Getting a quick overview of Japanese domestic stainless steel scrap market, positive and negative factors are mixed in a state of flux, but we can see that the price of SUS304 grade scrap price has bottomed out along with nickel price.
[Edited By O.Sasaki]