Mega Earth Quake Hits Ferrous Scrap Supply

Tohoku-Kanto Earthquake hits supply and demand of ferrous scrap. Electric furnace steel makers are reducing scrap procurement around Tokyo. Around Nagoya, ferrous scrap generation decreased largely due to shutdown of automobile plants. Around Osaka, ferrous scrap supply by sea is decreasing from other areas. As for export, South Korean steel makers are concerned Japanese scrap export may decrease, according to a large dealer. Especially, South Korean steel makers might be forced to buy ferrous scrap from the U.S.A. in May.

Electric furnace steel makers around Tokyo stopped additional scrap procurement from dealers after the earthquake emergence. Scrap arrivals are decreasing at dealers’ sites when automobile plants and automobile recyclers stopped operation. Most scrap dealers keep operations but they are forced to take actions for fuel shortage and planned power outage. Local supply and demand balance is unlikely to loosen in a short term, according to regional dealers.

Around Nagoya, major special steel makers are reviewing output plans since automakers shut off plants. Special steel makers stopped additional scrap procurement. Local electric furnaces assume scrap supply may increase from Tokyo when scrap shipment is actually stopped at Tokyo dealers’ sites. Some of electric furnaces in Nagoya are shortening lead time to take over scrap.

Ferrous scrap generation is decreasing when Toyota Motor and Suzuki Motor stopped operations. Scrap sales from small dealers to large dealers are also decreasing. Thus market inventory is lowering.

In Osaka, dealers will carry out joint export shipment on and after March 16th. One scrap dealer says heavy scrap supply may tighten more. Kishiwada Seiko raised its scrap purchasing price by 500 yen per tonne on Wednesday.