Japan Major Steels to Restart Ferrous Scrap Purchase

Japanese integrated steel makers restart ferrous scrap purchase. JFE Steel’s West Japan works starts to purchase scrap for Kurashiki area in June. JFE Steel studies to purchase scrap at East Japan works while Nippon Steel also mulls the purchase in and after July, according to scrap dealer sources. A trading firm source said the steel makers apparently try to see demand trend by purchasing scrap to increase the production, instead of restart of idling blast furnaces.

Japanese integrated steel makers purchased monthly 450,000-500,000 tonne of scrap from the market in the peak in 2008. The scrap consumption represented 14.8% of converter steel output in July-September. However, they stopped the scrap purchase in 2009 when they reduced the production widely. The scrap consumption rate increased to more than 11% in March from the bottom of 9.5% in January.

Japanese trading firm source said the higher scrap consumption contributes to the low cost operation when pig iron cost could be 33,000-35,000 yen per tonne despite of major price cut for iron ore and coking coal for fiscal 2009 while scrap market price is 23,000-24,000 yen for new cutting and other high grade scarp.

Japanese scrap market price is peaking due to lower export price after gradual increase. Electric furnace steel makers reduced the scrap purchase price for the first time in 2 months in Tokyo and Osaka. The scrap price, however, is expected not to plunge due to low level supply.

Some electric furnace steel makers around coastal area of Tokyo reduced the scrap purchase price while most of local makers keep the purchase price level at 22,000-23,000 yen per tonne for H2 grade. The purchase price of electric furnace steel makers around Osaka decreased by 750 yen to 21,000-22,000 yen for H2 grade in the week.