Quarterly Report – February 2021

With a state of emergency in place owing to the impact of Coronavirus, factory operations in the manufacturing industry have slowed down, building demolition work has decreased and the reduction in scrap generation has become obvious. It is unclear at this time how long the domestic scrap shortages will last and also whether the Tokyo Olympic Games will take place later in the year.  

Domestic ferrous scrap prices continued to grow rapidly up to the end of 2020 and exceeded Yen 40,000 per tonne (US$ 374). However, price levels were pushed down to Yen 36,100 per tonne (US$ 337) by the end of January owing to a number of factors, including delays in dispatching export shipments, the relative improvement in local mills’ scrap reserves and electricity companies requesting mills to save on energy usage. 

Domestic steel production in electric furnaces made a relative recovery in November last year to 1,977,000 tonnes - an increase of 4.3% over the previous month but 1% lower than a year earlier.

Exports of ferrous scrap remained strong last year in totalling 9,387,211 tonnes - second only to the 9,397,866 tonnes recorded in 2009 when 4,981,305 tonnes was shipped to China alone. The biggest customer in 2020 was Vietnam whose purchases surged 54.6% year on year to 3,412,886 tonnes whereas shipments to South Korea failed to reach 3 million tonnes for the first time since 2009 in dropping 24.6% to 2,964,774 tonnes. In 2020, South Korea’s annual crude steel production fell below 70 million tonnes for the first time in four years owing to the impact of COVID.

The export market made a strong start to 2021, with the Kanto joint tender at Yen 44,751 per tonne (US$ 418) on January 13. Inquiries from South East Asian countries then stopped for the Chinese New Year. There was an H2 scrap inquiry from South Korea at Yen 39,500 per tonne FOB (US$ 369) on January 20, down Yen 2500 from the previous week.