Ferrous Scrap Consumption Rate Marks Highest since 1974

The converter’s ferrous scrap consumption increased by 0.8 percentage point to 13.8% of the crude steel output for fiscal 2008 ended March 2009 from fiscal 2007, which represented year-to-year increase for 7 years in a row and marked the highest level since 1974, according to Japan Ferrous Raw Material Association. The ferrous scrap rate of the steel output remained high at 14.8% for July-September 2008 while the rate plunged to 10.5% for January-March under the significant output cut by integrated steels. The scrap consumption volume decreased for fiscal 2008 from fiscal 2007.

Integrated steels keep ferrous scrap purchase at very low level, according to a trading firm source. However, the scrap consumption rate increased to around 11% in March from recent bottom of 9.5% in January.

Domestic market price of ferrous scrap moved firm due to the export increase to China. But a dealer source sees the oversupply of higher grade scrap such as HS and plate cut scrap generated from shearing factory when the integrated steel makers reduce the purchase. On the other hand, one trading firm source forecasts the integrated steels would increase the ferrous scrap consumption when the demand recovers, instead of pig iron production hike.