According to the World Steel Association, crude steel production in August among its 64 reporting countries fell below the previous year’s total for the first time in 13 months - down 1.4% year on year to 156.8 million tonnes.
The main reason for the decline was that China, which accounts for more than 50% of the world’s crude steel output, stepped up its production cuts. According to a preliminary report from China’s steel industry association, domestic production in August was 4.1% lower month on month and down 13.2% year on year at 83.24 million tonnes - falling below 90 million tonnes for the second straight month and recording its lowest level since February. However, the recovery trend has largely continued across most countries following the sharp COVID-related decreases of last year.
Crude steel production in Japan amounted to 7.924 million tonnes in August for a gain of 22.9% over the same month last year; this represented the sixth consecutive month in which there was an increase.
Domestic demand is on a downward trend owing to difficulties in procuring semiconductors and parts for cars; however, other manufacturing fields and construction have remained strong and blast furnaces are in full operation to meet the demand.
Turning to scrap, the Kanto tender on September 9 saw a successful bid for 20,000 tonnes at an average of Yen 46,260 per tonne (US$ 420.55), which was Yen 386 (US$ 3.51) down on the previous month. Enquiries from overseas countries such as Vietnam have been sluggish and concluding export contracts has been difficult, with the result that bid levels fell for the third straight month.
Although Japan’s domestic scrap market continued to decline between July and early September, scrap prices remained in a rather high range from mid Yen 40,000 up to Yen 50,000 per tonne (US$ 409.09 to US$ 454.55). This trend seems set to continue for a while.
Ferrous scrap exports from Japan are on a downtrend owing to the renewed spread of COVID infections in South East Asian countries. Their steel imports are low because some blast furnaces are still out of service; this tight supply and demand environment is expected to continue.
According to Ministry of Finance and trade statistics, Japan’s ferrous scrap exports in August totalled 545,312 tonnes - down 8.8% month on month and 18.5% year on year. This is the third consecutive month of decrease and the second month in succession in which exports were below 600,000 tonnes. Sales to South Korea were the highest for the third straight month, rising 20.9% month on month and 109.8% year on year to 374,047 tonnes. Sales to Vietnam fell by 45.8% and 70.4% respectively to 85,281 tons, dropping below 100,000 tonnes for the first time since January 2019.