Japan Ferrous Scrap Supply to Keep Tight in January-March

Japanese ferrous scrap supply is expected to keep tight through January-March. The domestic scrap demand decreases by 3.2% to 9.274 million tonnes in the quarter from December-January. However, higher demand from domestic integrated steel makers and export keeps the tight condition when the scrap generation volume decreases.

Japanese raw steel demand is 26.88 million tonnes in January-March, according to outlook announced by Ministry of Economy, Trade and Industry in December. Ferrous scrap consumption was 31.5% for raw steel output and raw steel output represented 91.3% of iron raw materials use in fiscal 2009 ended March 2010, according to Japan Ferrous Raw Materials Association.

The largest scrap consumers of domestic electric furnace carbon steel makers keep the production level in the quarter when the main product, concrete reinforcing steel bar’s demand recovers mainly in urban area. Domestic integrated steel makers try to secure scrap supply when they prepare for potential supply decrease of iron making raw materials due to offshore heavy rain damage on mining areas.

Scrap export is slow recently due to Chinese New Year holiday in East Asian countries. However, Japanese scrap industry expect the scrap buyers in China and South Korea should restart the scrap purchase. Japanese scrap industry will keep shipping scrap for existing orders through early March. The scrap export is expected to contribute to the domestic tight supply.

The supply is still low level despite of the higher price level. Domestic scrap dealers increased the purchase price by 9,000-10,000 yen per tonne since mid-October. However, their purchase volume is same level, according to a dealer.