Japan: Scrap prices drop on currency appreciation, weakening overseas markets

• Tokyo Steel adjusts prices amid weaker exports
  
  
• Strong scrap inflows pressure domestic price levels
  
  

Japan's ferrous scrap market has been experiencing a downward trend, with a series of price reductions across several plants. On 22 April 2025, Tokyo Steel reduced its steel scrap purchase prices by JPY 500/t ($4/t) across sites, excluding the Utsunomiya plant. These reductions followed earlier price cuts at the Kyushu and Okayama plants.

The price cuts reflect a strong influx of domestic scrap and weakening overseas demand. The recent appreciation of the JPY to around JPY 140 per USD has added further pressure on domestic prices, reducing Japan's competitiveness in the global market.

Arrivals of steel scrap have been particularly strong at the Kyushu and Okayama plants in western Japan, driven by restrictions on receiving scrap from surrounding manufacturers. The Tahara plant has also seen increased arrivals due to a slowdown in production at other manufacturers.

Initially, Japan had maintained a "high west, low east" pricing structure, with prices peaking at JPY 43,000/t ($ 303/t) for H2 grade scrap in early April. However, as overseas market conditions deteriorated, prices have begun to soften, resulting in more balanced pricing across the country.

The downward trend in prices has now extended eastward. Tokyo Steel, known for aligning its purchasing strategy with export competitiveness, has begun adjusting its plant purchase prices in response to both domestic and international market trends.

Global updates

On the global front, the US saw a notable drop in HMS 80:20 scrap export prices to Turkiye, which fell to $332/t CFR by the end of last week. Export negotiations to Asia have stalled due to a significant gap between seller asking prices and buyer offers.

In Vietnam, bids for Japan's H2 grade scrap were at $325/t CFR, translating to approximately JPY 41,000/t ($ 289/t) FOB. This reflects the current export price level for shipments to Asia.

Rising uncertainty over the global economic outlook, particularly due to the US-China trade tensions, has led to a further decline in scrap prices across the US, Europe, and other regions.

Trump's tariff policy

The Trump administration's tariff policy had initially boosted the US steel scrap market, driving higher export prices to Turkiye and other Asian countries. This had contributed to Japan's "high west, low east" pricing structure.

However, following the announcement of a 10% mutual tariff on 2 April between the US and other regions, a "Trump tariff shock" triggered stock market declines and heightened global economic uncertainty. This led to a drop in US domestic scrap prices and a decline in export prices from both Europe and the US.

Outlook

With strong scrap arrivals at key plants, a weakening export market, and continued yen appreciation, downward pressure on domestic steel scrap prices is expected to persist. Totetsu's recent price adjustments reflect a broader shift in Japan's scrap market dynamics, as the "high west, low east" pricing pattern continues to unravel amid soft overseas demand and growing global economic uncertainty. Unless export negotiations to Asia improve or domestic demand strengthens, further price cuts remain likely in the near term.