Japan Integrated Steels’ Scrap Utilization Keeps Upward

Ferrous scrap utilization in Japanese domestic converter steel was 12.6% in May while scrap consumption for converter steel was 675,000 tonnes, according to Japan Ferrous Raw Materials Association. The utilization rate rose by 1.0 percentage point from April and represented upsurge for 4 straight months. Scrap consumption by Japanese integrated steel makers is expected to continue upward. In June, JFE Steel restarted scrap procurement from outer traders. In July, Nippon Steel also started to secure ferrous scrap at domestic iron works, according to a trader source.

Ferrous scrap utilization in Japanese domestic converter steel exceeded 14% for 9 months from March to November of 2008. Integrated steels entered wide output reduction after then along the demand downturn for steel products. In January 2009, scrap utilization rate plunged to below 10% for the first time since December 2003.

Domestic scrap consumption volume still stays 40-50% lower than the peak in 2008. Meanwhile, the utilization rate in May reached the level as high as October 2007 when 1-million-tonne scrap was consumed. Integrated steels seem to recover their output toward this autumn, said a scrap dealer, and the makers would continue scrap procurement as long as the price maintains reasonable compared with hot metal.

High grade scrap price is surging under the condition. A trader source suggested high grade scrap such as HS is easier to be stocked than low grade scrap and the supply easily tightens. HS price is currently above 30,000 yen per tonne for both domestic and Chinese markets.