CrScrap Market Outlook

2015/06/30

The Japanese domestic chrome-based SUS400 series stainless scrap market, which had seen lower prices with an abundant supply, has become tight since last year when the exports to Taiwan and Thailand increased. So, the prices have recovered to the level where the scrap dealers and traders can gather the material with profitability.
→(Related article)SUS Stainless Scrap Market Updates: 304 grade keep high price

The following table shows the transition of exports of stainless scrap to Taiwan and to Thailand from November 2014 to April 2015.

[Transition of SUS scrap to Taiwan and to Thailand from November 2014 to April 2015]


Especially, the export to Thailand has notably increased to 661 tons in January (average export price = JPY75/kg), to 659 tons in February, to 1,216 tons in March and to 1,701 tons in April this year. Judging from the price, SUS400 series stainless scrap must have been shipped.

While the export to Taiwan also jumped to 2,192 tons in December last year, the average export price dropped sharply to JPY106/kg from JPY161/kg in November 2014. The increased amount of the export indicates that shipment of SUS400 series scrap increased.

A trader exporting SUS400 series scrap to Taiwan said, “We have exported substantial amount of SUS400 series scrap to Taiwan where the demand for the material has increased since December last year.”
But, why has the demand for SUS400 series scrap increased in Taiwan?
“Why? I don’t’ even know…. My guess is that stainless steel manufacturers in Taiwan seem to have chosen SUS400 series scrap as chrome source since they increased the use of ferronickel.”
Another trader said, “Stainless steel manufacturers tend to use SUS400 series scrap more on a global basis.” This also has contributed to the increased demand for SUS400 series scrap.

The shifts from SUS304 series scrap with an endless severe price competition to SUS400 series scraps with additional value more profitability has been seen both in China and in Korea.
But, the technical strength is questioned more in SUS400 series than in SUS304 series, representative of nickel-based materials. So, Japanese SUS400 series has a 10-to-1 advantage over the market.
The difficulty in producing high-quality chrome-based material accepted by global automobile manufacturers and consumer electronics companies in a day can be seen in the fact that the production of chrome-based material remains restrained both in China and in Korea.

Too much purchase from Taiwan
The export both to Thailand and to Taiwan will be reported to be substantial in May and in June.
There are various opinions over the purchases from Thailand. Some sources say that foundries in the country has purchased the material, others say that the materials are purchased for resale to India and just for dealers’ stock building. But, in fact, it’s Thailand that purchases SUS400 series stainless scrap at the highest price in Asia as of end-June.
A scrap trader trying to purchase SUS400 series scrap in Malaysia to resale it to Thailand was rejected by a Malaysian dealer saying, “We can’t sell the material at that price. We can sell it for a higher price in Thailand.”

In this way, the Japanese SUS400 series scrap price has risen due to the continued robust exports to Taiwan and to Thailand.
As of end-June, the export shippers’ purchase prices of SUS430 series (18Cr) are at JPY39-40/kg. And, those of SUS410 series (13Cr) and SUS403 series (13Cr) are at JPY36-37/kg.
There’s not yet a purchase from China at the moment, but Korean buyers are offering the same prices as Taiwan buyers because POSCO also has gradually been shifting to use chrome-based material in place of nickel-based material with little margin as mentioned above.
The expansion of export market saved substantially the 13Cr and the mixed item of 18Cr and 13 Cr, which generate more especially in central Japan.
While export has increased, Japanese domestic good chrome-based scrap users such as specialty steel manufacturers have had difficulty in purchasing the material.



However, a shipper to Taiwan said, “The purchases from Taiwan seem to be too much. The price may be close to ceiling.”
The shipper thinks that the export to Taiwan will decrease because, “Stainless steel manufacturers in Taiwan are far from in good form. The operation rate of YUSCO is said to drop to 30% and the same goes for Walshin and Tang Eng Iron Works where the use of chrome-based material is less. Demand seems to have reached a limit.”

As to the export to Thailand, the shipper is concerned, “Several years ago, Thailand also purchased chrome-based scrap in bulk just like what it does today. But, they got less able to continue the purchase and then sold the material to other countries at a giveaway price. The same thing may happen this time.”
So, the shipper urges the customers to ship chrome-based scrap early saying, “When the export demand drops, the supply of the material will be soon in surplus again. So, it’s now to ship the material.”

On the other hand, another exporting trader said, “Generation of chrome-based scrap is less and has decreased in Japan, though not to the extent of nickel-based scrap. The market will not see the supply in surplus so soon,” and added, “Even if the chrome-based export to Taiwan dropped, the demand from domestic and international markets would set it off because stainless steel manufactures are shifting to use SUS400 series on a global basis.”

Nearly half year has passed since the expansion of export market changed the supply of chrome-based scrap from being in surplus to being tight. The export has worked sufficiently as adjusting valve for chrome-based scrap supply-demand balance.
Overseas consumers purchased Japanese chrome-based scrap as it was comparatively cheap, but if the price rises, they may decrease the purchase and even choose ferrochrome in place.
As the ferrous scrap has entered into an off season again, SABOT price in July is more likely to drop along with the declining nickel prices. At least, the prices of chrome-based scrap won’t rise further than the current level.

(Edited By O.Sasaki)

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