Japan Ferrous Scrap Use Drops by 23.5% in January

Japanese ferrous scrap consumption drops sharply under major steel production cut. The consumption decreased by 23.5% to 2.224 million tonnes in January from December halving from the recent peak in October 2008. Domestic electric furnace carbon steel makers and other steel makers keep major production cut since late 2008. The low level consumption could continue for months under very slow demand.

The scrap consumption decreased by 29.4% 533,000 tonnes for converter steel in January from December, Japan Ferrous Raw Materials Association. The consumption decreased by 19% to 1.326 million tonnes for electric furnace and by 20.7% to 312,000 tonnes for castings and other applications.

The ferrous scrap consumption was higher in January-September 2008 than a year earlier level due to strong demand for steel products. However, Japanese steel makers started to reduce the production significantly since autumn 2008 reducing the scrap consumption.

The total scrap consumption decreased by 14.2% to 3.937 million tonnes in November and by 26.1% to 2.909 million tonnes in December from a year earlier. The consumption decreased every month. The integrated steel makers’ scrap purchase is almost nothing, according to the dealer source, when the makers can manage the operation with the inner scrap from the steel plants. The scrap consumption rate at converter decreased to less than 10% in January for the first time in 5 years.

The scrap consumption kept increased from 2002 to 2008 when the steel makers expanded the production to meet strong demand. The consumption kept more than 4 million tonnes per month from September 2006 to October 2008.

Japanese ferrous scrap supply decreased by 29.2% to 2.376 million tonnes in January from December, which dropped for 3 months in a row. The inner scrap from steel plants decreased by 16.4% to 935,000 tonnes while the scrap supply from the market decreased by 35.7% to 1.44 million tonnes.