Japan Ferrous Scrap Supply to Keep Balanced in October-December

Japanese ferrous scrap supply is expected to keep balanced in October-December as July-September. The domestic demand is likely to keep low level when electric furnace carbon steel makers keep low level production under slow construction activity. However, the supply is still low level and offshore buyers’ appetite is still firm for Japanese scrap.

Japanese raw steel output is 25.28 million tonnes in October-December, which is 3.7% higher than July-September, according to Ministry of Economy, Trade and Industry. The scrap consumption is estimated to be around 9.313 million tonnes in the quarter when the scrap consumption rate was 33.6% for raw steel output and the yield was 91.2% for steel source input, according to Japan Ferrous Raw Materials Association.

The largest scrap users of electric furnace steel makers couldn’t increase the scrap consumption in October-December from July-September. Their scrap use keeps increasing from April but the volume is still low level. A dealer source said the domestic tight supply balance of scrap in April-September was due to low level supply and higher export.

Domestic integrated steel makers increase the scrap consumption recent months to increase the raw steel output. However, the impact is limited on the supply balance. Some scrap dealers expect the integrated steel makers could reduce the scrap purchase in and after November.

Domestic scrap generation is still low level due manufacturers’ low level activity. A dealer said the purchase volume is around half of normal level from manufacturers and the market. The scrap generation is expected to keep low level.