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Owing to the global rise in raw material prices, the ferrous scrap export market has steadily improved. Demand in the domestic market has also increased because of a recovery in electric furnace production and scrap purchases by blast furnace operators. However, supply has remained very tight owing to sluggish generation and minimal activity levels among scrap dealers.

On May 9 this year, the Kanto tender was won with a bid of Yen 49,195 per tonne (US$ 447.22) for 7500 tonnes for June shipment - an increase of Yen 362 (US$ 3.29) over bids from the previous four months and the highest since the Yen 50,650 per tonne (US$ 460.45) recorded in August 2008. But the bid on July 12 this year of Yen 47,888 per tonne (US$ 435.35) for 4000 tonnes represented the first price decrease in five months owing to a number of factors, including the Olympic Games and summer furnace suspensions. However, demand has remained strong for higher-grade scrap.

According to the World Steel Association, crude steel production among the 64 reporting countries reached 174.376 million tonnes in May for a year-on-year increase of 16.6%. China’s production increased significantly to not far short of 100 million tonnes for a single month in totalling 99.45 million tonnes. Turkey and Vietnam, both major importers of scrap, also increased their steel production. Overall demand for scrap has continued to push higher and prices for all raw materials - including iron ore and coking coal - have remained in a very high range.

A bulletin from the Japan Iron and Steel Federation confirms that domestic crude steel production was 8.422 million tonnes in May this year - an increase of 7.7% month on month and of 42.2% year on year. Owing to COVID, production in May last year had been a mere 5.923 million tonnes.

Trade statistics from Japan’s Ministry of Finance reveal that ferrous scrap exports amounted to 699,618 tonnes in May this year - a decrease of 21.1% from the previous month but an increase of 2.2% from the same month in 2020. Recording its highest monthly purchases since last December, Vietnam took 286,027 tonnes of Japan’s exports for increases of 10.1% month on month and 69.7% year on year. South Korea’s purchases of 214,110 tonnes represented a decline of 29.4% month on month while Bangladesh took only 22,144 tonnes - its lowest total since May 2019 and representing declines of 80.2% month on month and 73.8% year on year.