Japan Ferrous Scrap Demand Turns into Recovery

Japanese ferrous scrap demand is rebounding after summer when electric furnace steel makers completed periodic repair in summer. Electric furnace steel makers are expected to increase consumption of ferrous scrap in twice-3 holidays, September. Special steel makers are expected to continue top-line production due to recovery of automobile production. Integrated steel makers are expected to increase production after autumn. One dealer source said there is possible integrated steel makes increase purchase volume of ferrous scrap when ferrous scrap price maintains over 30,000 yen per tonne against high pig iron price. Japanese ferrous scrap export price rebounded to South Korea due to rising American ferrous scrap price.

The forecast of crude steel output by electric furnace is each over 400,000 tonnes around Tokyo and Osaka, and near 400,000 tonnes around Nagoya in September. Each electric furnace steel maker accumulated inventory of ferrous scrap in July and August when dealers increased shipment to steel makers due to decreased ferrous scrap price. However, one large dealer source said uses such as general contractors are increasing order of steel products for building material when the market price of steel products hit bottom due to rebound of ferrous scrap price.

Tokyo Steel Manufacturing, Japanese largest electric furnace steel maker, already raised purchase price of ferrous scrap twice in September. Japanese ferrous scrap export price increased by 500-1,000 yen per tonne to FOB 34,000-34,500 yen to South Korea due to rising American ferrous scrap price.

Ferrous scrap market price rose since the first half of July around Tokyo. The purchase price of electric furnace steel makers is 34,000-35,000 yen per tonne for H2 grade around Tokyo and some pay as high as 35,500 yen. Some steel makers such as Utsunomiya works of Tokyo Steel Manufacturing increased the purchase price of ferrous scrap by 500 yen per tonne from Wednesday. One dealer source exporters clamp down on shipment of ferrous scrap at FOB 33,000-34,000 yen per tonne when export price hit bottom.

The purchase price of electric furnace steel makers is 34,000-34,500 yen per tonne for H2 around Osaka. Steel makers are careful for price hike of Tokyo Steel. However, one large dealer source said some steel makers may start spot purchase when dealers don’t ship ferrous scrap due to anticipation of high price.