Too serious decline in generation of SUS304 grade stainless steel scrap

2015/09/21

Domestic SUS304 grade stainless steel prices have not dropped so much as manufacturers expected due to a major decline in generation. Rather, too serious difficulty in collection may result in spread of double pricing.

“Generation of scrap is so low that we can’t take this situation in a simple saying of appreciating what we can’t have,” a stainless scrap dealer said.

This would be what many stainless scrap dealers, processors and trading firms are feeling most strongly.
Domestic stainless steel scraps, which had decreased year by year, have been dropping much more sharply this year. This is obviously due to the drops in stainless steel scrap prices. Rather, as actual industrial activity has lowered, the processing of stainless steel has decreased due to declining demand for stainless steel. As a result, generation of prompt scrap has also decreased.
This, however, makes us feel the continued negative effect of the Democratic Party of Japan.

Under the administration of the said party that didn’t take any economic measures, the currency appreciated to \75 per dollar and many Japanese stainless steel processors shifted their plants overseas. Briefly, domestic industry was hollowed out further in those days.
In addition, dropped demand for stainless steel due to increasing rival materials also contributed to the situation.

Demolition projects, the last hopes, are few and if any, they are not progressing so much due to shortage in labor and rising labor cost.
The circulation of so-called the scrap and build has been stopped. Not a few new construction projects have been given up. Japan’s real economy is more likely to deteriorate further.

The movements of materials in the markets have shown a surprising sense of stagnation as both NEW scrap (prompt scrap) and OLD scrap (scrap generated from demolition) generation have seriously decreased.

“Anyway, there is no inflow of materials. Those yards who have some quantity of materials (more than 50 tons) are hesitating to sell them for 130 yen or less per kilo,” a dealer specializing in stainless steel scrap in Kansai region said. The market prices are still around 130 yen per kilo and have not yet dropped to the level of 120-125 yen per kilo which is the manufacturers’ asking purchasing price. Actually, it’s impossible to lower the prices to that extent due to too serious low inflow of scraps.

Meanwhile, specialty steel manufacturers are not concerned about the low inflow of scraps because of their decreasing production and being before the interim closing, but it is said that some of them have started spot purchases to keep inventory for year’s end. In such a case, the contract would be concluded at a special price, so-called the double pricing. If the low inflow of SUS304 grade scraps continues, such a double pricing will increase more and more.

In fact, the said stainless steel scrap dealer in Kansai region said, “Manufacturers are asking us to supply their requesting amount, but there aren’t enough materials even if we want to meet their demand.”
If manufacturers want to purchase a substantial amount of materials, they have to pay for nearly 135 yen per kilo at the moment. So, it is expected that manufacturers’ actual purchasing prices will edge up to 135 yen per kilo.

LME nickel prices remains around $10,000/t. The US Federal Reserve decided to keep rates unchanged on 17 September, but this doesn’t mean that the global economy will improve nor that demand for nickel will recover. The nickel prices are expected to remain around $10,000/t for the moment.


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As to SUS304 grade stainless steel scrap export, there are no requests or prices offered from Taiwan. For India, the export prices are at $1,150/t CIF. They are not so definitely good prices for domestic stainless steel scrap dealers, but demand for stainless steel scraps in India seems to be relatively healthy.

Meanwhile, SUS304 grade stainless steel scrap import prices remain at $1,100-1,150 FOB U.S., which will be more than 140 yen per kilo CIF Japan when converted into JPY at the exchange rate of 120 yen.

SUS430 grade (Chrome) stainless steel scrap prices have dropped by 2-3 yen per kilo. DaidohTokushu Kogyo also lowered their purchasing price for SUS430 grade scraps by 2 yen per kilo on 17 September due to declining ferrous scrap prices and sharp drops in export demand for Thailand and Taiwan. Their purchasing prices are considered to be 35-36 yen per kilo.

SUS430 grade scraps were once fought over due to the increased export, but it is recently said that there was an offer of selling a substantial amount of SUS430 grade scraps to stainless steel manufacturers. This suggests that the export market for SUS430 grade scraps also may have been closed.

(Edited by Sasaki)

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