Higher Self Ferrous Scrap Supply in China, Korea Impacts Japan Export

Japanese ferrous scrap export could be impacted by higher self sufficient rate in South Korea and China. South Korean supply would cover more than 90% of domestic requirement for 2020. Chinese domestic nominal supply also covers the domestic requirement depending on improvement of the poor recycling system when the accumulated steel reached 5 billion tonnes in 2011. Japanese scrap exporters would have to develop new buyers in Southeast Asia and other region.

South Korea and China increased ferrous scrap import from Japan to cover increasing steel production capacity under smaller accumulated steel volume. Japanese export volume increased in 2000s and peaked at 7.5 million tonnes in 2006. The volume was around 5 million tonnes in 2011, of which Japan shipped 50% for South Korea and 20% for China.

The accumulated steel is increasing in South Korea and China due to economy growth in the countries. The volume would increase by 39.8% to 756.68 million tonnes for 2020 in South Korea from 2010. Korea Iron & Steel Association sees ferrous scrap import would decrease by around 50% to 4 million tonnes during the period. The accumulated steel in China would increase to 10 billion tonnes for 2015 from 2.9 billion tonnes in 2006. China also tries to use more scrap by improving scrap generation system.

Some Japanese scrap exporters try to increase the export for Vietnam and India in recent years. However, the scrap export could decrease when other countries wouldn’t cover the import reduction by the major 2 importers of South Korea and China. One Japanese integrated maker source sees the exporters could increase the export for emerging countries when steel makers use high value added steel more in the countries while high grade scrap sources are limited in Russia, Japan and USA.