Japan Major 2 Steels’ Purchase Lifts Ferrous Scrap Market

Nippon Steel and JFE Steel’s higher ferrous scrap purchase volume impacts on Japanese market. The domestic scrap supply was 200,000 tonnes short for the consumption in January-June while the material is one of few resources with self sufficiency for Japan. The price increased by 30,000 yen per tonne during the half year. The supply was 27.99 million tonnes in the first half against 28.19 million tonnes of consumption. The consumption by converters increased by 22% or 1.3 million tonnes to 7.22 million tonnes when Nippon Steel increased the purchase and JFE Steel started the full swing purchase though JFE Steel purchased only small portion from the market. Nippon Steel started the operation of shredder machine at Oita works to increase scrap consumption. JFE Steel tries to reduce the carbon dioxide emission by increasing scrap consumption instead of pig iron production. The firm starts scrap treating shaft furnace and shredder machine at Keihin area of East Japan works. Scrap is better solution to clear voluntary target of carbon dioxide emission than purchase of emission credit. Nippon Steel is estimated to purchase 3.4-3.5 million tonnes of scrap from the market for fiscal 2008 ending March 2009 while JFE Steel plans to purchase annual 2 million tonnes scrap from the market to increase the raw steel output by 3 million tonnes by fiscal 2011. The total 5.5 million tonnes of purchase by 2 major steels represents more than 10% of scrap supply in Japan.