Japan Ferrous Scrap Price Keeps 30,000 yen/t

Ferrous scrap purchase price by electric furnace steel makers in Tokyo and Osaka reached 30,000 yen per tonne and keeps the level. The price is around 5 times of the bottom of less than 7,000 yen in 5 years ago. The market is lifted by strong demand at home and abroad. Japanese scrap market became international market mainly in East Asia after the slump. The scrap is getting more valuable under growing demand when integrated steel makers try to increase the use to reduce the carbon dioxide emission. The scrap supply was very loose in 2001 when local electric furnaces reduced the output. Scrap dealers try to ship to offshore market to breakthrough the oversupply condition. Scrap dealers established Kanto Tetsugen around Tokyo and the dealers around Osaka restarted the export for the first time in 3 years through Kansai Tetsugen. The move internationalized the scrap market. Japanese scrap export increased to 7.505 million tonnes in fiscal 2005 ended April 2006 compared with 6.906 million tonnes in fiscal 2001. China, which is largest importer of Japanese scrap in past 5 years, increased the import to around 3.4 million tonnes in 2005 from around 2.86 million tonnes in 2001. Steel makers increased the output worldwide and scrap supply is tight in East Asia. South Korea and Taiwan shift to Japanese scrap due to the shorter lead time from traditional sources of USA. Hyundai Steel of South Korea conducts scrap purchase tender every week. The firm offers the price as Japanese domestic price level recently. Japanese scrap market is getting more influential to East Asian market from local market. Japanese scrap consumption increased to 48.28 million tonnes in fiscal 2005 from 40.61 million tonnes in fiscal 2001. The demand is lifted by strong demand for steel products under active high rise condominium construction. Integrated steel makers try to secure scrap for environmental action along with output increase. Japanese converters increased the scrap usage from around 5.94 million tonnes in fiscal 2001 to around 10.42 million tonnes in fiscal 2005. JFE Steel plans to use more than 1 million tonnes per year of scrap by fiscal 2008 instead of iron ore and coking coal to reduce carbon dioxide emission. The firm increases the scrap purchase to 100,000 tonnes in the second half of fiscal 2006 from 20,000 tonnes in full year of fiscal 2005. Japanese scrap market is in new era as environmental friendly steel making operations along with the worldwide strong demand for steel.