Japanese domestic SUS304 Scrap Market is on an upward trend
Amid unchanged nickel fundamentals, speculative price rise in SHFE, declining US dollar, rising crude oil prices and El Nino keep LME nickel price at the $14,000/t level. The average nickel price rose to $14,025/t in May as of May 12, up $1,234/t from $12,791/t in April.
The current nickel price is around $14,200/t, rising to the level of early March of the year. When it dropped below $13,000/t at the end of March, a new downward trend seemed to start. As a result, the emergence of SHFE Nickel led to the current nickel price rise after driving up the LME nickel price.
However, despite the increase in LME nickel price, the spot premiums of actual nickel cathode and briquette are on a downward trend. There is little spot purchase from end users supplied enough with their yearly contract. Thus, the current nickel price rise has always concerns about possible price drop as there is little actual demand.
Sabot Export Price for Taiwan is $1,350/t
Since the demand for stainless steel materials remains steady at low level like their prices, the purchases for SUS304 scrap (Sabot) is not so strong from Taiwan and Korea. The CIF Taiwan is $1,350/t, which will be 162yen/kg converting at 120 yen to a dollar. And, the FOB will be 150-152yen/kg. The prices of Japanese domestic manufacturers except NISSIN STEEL and NSSC are coming close to the export FOB price.
A first vendor specialized in stainless scrap in North Kanto region raised their purchase price of SUS304 scrap by 5yen/kg to 147yen/kg on May 8. This led a stainless manufacturer in Kanto region (NIPPON YAKIN KOGYO) to offer a higher price to some of their suppliers at the beginning of this week. Market prices in Kanto region for SUS304 Solid are around 140-145yen/kg, but their purchase price is at nearly 145yen/kg.
At Nearly 150yen/kg in Kanto region and Central Japan region
Another first vendor in Kanto region say, “Almost one week after the nickel price started to rise, suppliers (scrap dealers) are requesting us to raise our purchase price. We would like to ask manufacturers to raise the purchase price from us.
Despite the lack of demand, in fact, scrap markets respond sensitively to the rise in LME nickel price. It is unchanged that the responses are quicker to materials and slower to products all through the ages. Thus, stainless manufacturers are at a loss. Actually, it is not possible that the ailing SUS304 sheet stainless market accepts the products price rise even if the nickel price or scrap price is rising. The current major gap between stainless market and nickel price exists here.
NIPPON YAKIN KOGYO seems to produce 25,000-26,000t ahead of schedule in June for the possible decrease in production caused by high electricity expenses in summer. This would be one of the reasons for their continued purchase of scrap. The rise in electricity costs in summer will have an impact on the production in electric furnace manufacturers also in Kansai region.
2 Special steel manufacturers in central Japan region seem to keep their purchase price around 150yen/kg, not lowering them as much as NISSHIN STEEL and NSSC.
If the LME nickel price, which has continued to rise virtually remains at the current $14,000/t level with affected by El Nino, NISSHIN STEEL and SNNC are expected to inevitably raise their purchase price of scrap. According to a source, the flow of scrap to the NISSHIN STEEL’s Shunan Works in Yamaguchi prefecture, whose purchase price is the lowest in Japan at the moment, is “extremely low”.