Tighter High Grade New Cutting Scrap Supply in Nagoya

Supply of new cutting ferrous scrap for foundry makers gets very tight around Nagoya when the sources of automakers reduce the output. Toyota Motor and the related parts makers reduce the operation after the major earthquake. Some of the buyers of foundries reduce the production due to the limited material availability.

The supply is tight for new cutting scrap without metal plating and with low manganese content. The scrap is generated from blanking operations of automotive parts makers. The scrap has higher Fe content than normal new cutting grade scrap, which is used at electric furnace carbon steel and special steel makers. Foundries usually use the higher grade scrap mainly along with foundry pig iron from integrated steel makers.

Toyota Motor had stopped operations at all 14 domestic plants since March 14 due to limited availability of parts after the quake. The firm resumed a part of the operation at Tsutsumi plant and Toyota Motor Kyushu on Monday. With the 2-week output reduction, many of the related parts makers also reduced the output.

A scrap yard source said scrap generation halves recently even from parts makers for Prius models. For Toyota Motor Kyushu’s production, the suppliers of foundry makers procure scrap from Nagoya area through land transport. The supply around Nagoya gets tighter due to such higher demand and limited local supply.

Some foundry makers’ shipment also decreases due to lower automakers’ output. However, other foundries for construction materials try to secure the scrap to keep the almost normal demand but some of them have to reduce the output due to limited availability of the material.

The buyers try to get the material at more than 50,000 yen per tonne from the trading firm and yard dealers around Nagoya. However, a trading firm source said the suppliers also cannot secure the additional metal from existing sources with thin inventory and new sources. Many of foundries around Osaka and Nagoya cannot secure enough scrap to keep the planned production.

Some foundries try to import pig iron as the alternative iron source. However, a foundry source said the maker cannot import pig iron to keep profitable operation under uncertain foundry selling price in the market when the pig iron import price is around 70,000-75,000 yen per tonne. The tight scrap supply could stop some of foundries’ operations in near future.