Japan Integrated Steels Increase Scrap Consumption Rapidly

Ferrous scrap consumption by Japanese integrated steel makers is increasing rapidly. Scrap usage rate of domestic converters rose by 0.4 percentage points to 13.0% in June from May, according to Ministry of Economy, Trade & Industry. The rate surged for 6 consecutive months, which hit the bottom at 9.5% in January. The rate in June recovered to the level for November 2008-Janaury 2008 when scrap consumption was around 1.1 million tonnes.

Scrap consumption keeps low level, below 1 million tonnes for 7 consecutive months. JFE Steel restarted scrap purchase in West Japan iron works from the market in June. Japanese steel demand is recovering. But a large dealer source pointed out there still is a risk for oversupply if integrated steels restart operation of suspended blast furnaces. Then integrated steels increased the usage rate of ferrous scrap in converters, not iron ore. Nippon Steel restarted scrap purchase in July, too. The firm’s Oita iron works resumed operation of a shredder plant.

A dealer source said ferrous scrap market price increased to around 32,000 yen per tonne for HS grade with strong overseas demand such from China while Japanese integrated steels are increasing the purchase volume.