Japanese scrap market weakens/Export prices dip as yen strengthens/Korean market sluggish as US material returns/Chinese imports rise

摘要

Since the end of July, scrap prices in Japan have been falling as a result of reduced domestic and export demand. Domestic demand has weakened principally, though not entirely, for seasonal reasons; it is typically over the summer that EAFs are shutdown in order that companies can make any necessary repairs and thorough relining of furnace walls. It is also due to peak power pricing. Of a more serious concern to scrap merchants in Japan is the dampening export situation caused by seasonal factors among scrap consumers, increasing supply from abroad, and the ongoing strength of the yen against the dollar. The rapid rises in export volumes and prices for Japanese scrap, which in turn helped strengthen, via supply constraints, a poor by comparison domestic market, are at an end. This situation hasn't reversed itself as domestic demand has long since ceased to be depended upon to the extent of exports but we can certainly confirm that local EAFs will generally be increasing their output over September, in order to prepare for the eagerly awaited construction "season" during Q4. While this should start to benefit merchants over the latter two weeks of September and beyond when the maintenance shutdowns have entirely finished, exports to target destinations such as South Korea, Taiwan, and the PRC (China mainland) have continued to deflate in value.