The domestic ferrous scrap market has continued to improve steadily, reaching its highest price levels since 2008 amid tight global supply and demand. Raw material prices remain high worldwide, with gains for iron ore, coking coal and non-ferrous metals helping to push a strong ferrous scrap market even higher.
In Japan, mill prices on the third weekend of April 2021 were at Yen 42,033 per ton (US$ 385.62), their highest level since the Yen 43,667 (US$ 400.61) on the fourth weekend of September 2008. These average prices are drawn from the three main districts of Japan: Kanto (Greater Tokyo area), Chubu (Nagoya area) and Kansai (Greater Osaka area). The reason for such a high price lies in global pandemic-related government stimulus packages, and it has been achieved despite the continuing state of emergency in some of Japan’s major cities, which is expected to remain in place until the end of May.
Japan’s domestic steel production is on a recovery trend with the January total some 3.7% higher than that for the same month in 2020 at 1.836 million tons, the first year-on-year gain for 23 months. In February, production grew to 1.924 million tons, although this represented a 0.9% decrease over the previous year.
The Kanto joint tender on April 9 brought a winning bid average of Yen 43,380 per ton (US$ 397.98). Then on May 11, the bid was Yen 48,833 per ton (US$ 448.01) - the first time Yen 48,000 had been exceeded since August 2008 when Yen 50,650 (US$ 464.68) was recorded just before the Lehman Brothers shock.
Turkey, the world’s largest importer of ferrous scrap, produced 3.397 million tons of crude steel in March 2021 (+12.3% year on year) while Vietnam, the largest export destination for Japanese ferrous scrap, produced 1.94 million tons in the same month (+43.7% year on year). Although the Chinese government has indicated a policy of producing less crude steel in future, monthly production in March 2021 of 94.02 million tons was second only to the record high of 94.84 million tons set in August 2020.
According to the Ministry of Finance and trade statistics, Japan’s ferrous scrap exports in the 12-month period from April 2020 to March 2021 increased by 6.6% year on year to 8.834 million tons, thus exceeding 8 million tons for the second consecutive year. This is the third highest total ever (after the 9.078 million tons of 2012 and the 8.965 million tons of 2009) as a result of the 23.3% increase in sales to Vietnam to a record-high 3.241 million tons.