Larger East Asian Presence in World Ferrous Scrap Market

Ferrous scrap import volume by China, South Korea and Taiwan was around 1 million tonnes higher than Turkey in 2009. The East Asian countries lead the world market. Japanese and US scrap shipment focused on the East Asian market when China and emerging countries in Asia expanded steel production and scrap consumption to serve higher infrastructure investment under stimulus package. Japanese scrap industry sees scrap pricing sifted to Asian market.

The scrap import of China, South Korea and Taiwan increased by 9 million tonnes to record 25.4 million tonnes in 2009 from 2008. Japan supplied 9 million tonnes and USA exported 11 million tonnes for the 3 countries. Japanese scrap export was almost all for Asia while Asian countries represented around 50% of US scrap export. Turkey’s scrap import decreased by around 2 million tonnes to 15.6 million tonnes, of which US export was less than 4 million tonnes.

International scrap market price was led by the largest exporter of USA. However, East Asian countries increased the impact on the market when Asian countries expanded the scrap consumption and Japan increased the influence in Asian market. Much lower scrap export by Russia also increased Japanese influence.

South Korean buyers keep certain volume of import while China is still swing buyer with speculative purchase by individual traders. South Korean buyers shifted to Japanese scrap when China increased the import and Russia reduced the export while South Korean buyers traditionally imported mainly from USA, Japan and Russia depending on the price. Japanese scrap industry increases the influence on South Korea and Asian market when Japanese scrap represented 50% of the South Korean import.

Asian scrap market is expected to increase when the consumption will increase in India, Vietnam, Malaysia and other emerging countries. Depending on the demand growth, the supply could get tighter when scrap supply couldn’t increase at the pace as demand increase while scrap generation started to recover in Japan and USA.